Question: Please show work in excel spreadsheet. Thank you! ABC's capital structure is limited to common equity and bonds. Its target capital structure calls for 56percent
Please show work in excel spreadsheet. Thank you!
ABC's capital structure is limited to common equity and bonds. Its target capital structure calls for 56percent common equity and the rest long term debt. The company's outstanding bonds have a yield to maturity of 7.6 percent. The company's common stock, which sells for $57.82 per share, is expected to pay a dividend of $2.55 next and the dividend is expected to grow at a constant rate of 12.8 percent. Given its tax rate of 40 percent, what is ABC's weighted average cost of capital?
MNO's capital structure includes bonds, preferred stock, and common stock. The target capital structure calls for 42 percent common stock, 14 percent preferred stock, and the remainder as bonds. The company's bonds have a yield to maturity of 6.2 percent. The company's preferred stock, which sells for $93.29 per share, pays an annual dividend of $4.88. The market risk premium for the average common stock is 13.7 percent and the risk-free rate is 2.9 percent. MNO stock has a beta of 2. If MNO's marginal tax rate is 40 percent, then what is MNO's weighted average cost of capital?
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