Question 3: Weighted Average cost of capital (WACC) + The following is a partial balance sheet...

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Question 3: Weighted Average cost of capital (WACC) + The following is a partial balance sheet showing the capital structure of Kijiji Inc. 6.5% 20-year bond (Semi-annual) 5% $100 par preferred stocks Common Stocks $5 par Additional Information $80,000,000 $15,000,000 $12,500,000 i) Each common stock and preferred stock is trading at $57 and $93 on the stock market respectively. ii) The market risk premium is 6% while the interest rate on Treasury bonds is 4.5%. The firm's beta factor is 1.05. iii) Bonds are trading at 92% of par value. Interest is paid semi-annually. iv) The corporate tax rate is 25%. Required I) Compute the number of bonds, preferred stocks, and common stocks. II) Compute the market values of each source of capital and the capital structure weights. III) Compute the cost of preferred stock, (KP), cost of debt (Kd) and cost of equity, (Ke) IV) Compute the weighted average cost of capital (WACC). Question 3: Weighted Average cost of capital (WACC) + The following is a partial balance sheet showing the capital structure of Kijiji Inc. 6.5% 20-year bond (Semi-annual) 5% $100 par preferred stocks Common Stocks $5 par Additional Information $80,000,000 $15,000,000 $12,500,000 i) Each common stock and preferred stock is trading at $57 and $93 on the stock market respectively. ii) The market risk premium is 6% while the interest rate on Treasury bonds is 4.5%. The firm's beta factor is 1.05. iii) Bonds are trading at 92% of par value. Interest is paid semi-annually. iv) The corporate tax rate is 25%. Required I) Compute the number of bonds, preferred stocks, and common stocks. II) Compute the market values of each source of capital and the capital structure weights. III) Compute the cost of preferred stock, (KP), cost of debt (Kd) and cost of equity, (Ke) IV) Compute the weighted average cost of capital (WACC).