Sophie's Sandwich Shop, Inc. (SSS) has 4.2 million common shares outstanding and selling for $49 per...

 

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Sophie's Sandwich Shop, Inc. (SSS) has 4.2 million common shares outstanding and selling for $49 per share. SSS has 3.7 million shares of preferred stock outstanding selling for $34.50. The company has 110,000 outstanding bonds with a market price of 97.5 and coupon of 8% paid annually. The bonds mature in 7 years. In the space below, calculate the weights used for a WACC calculation. Investors, analysts and stakeholders all expect the future dividends of SSS to grow indefinitely by 5% per year. The stock has a beta of 1.58, the current risk-free rate is 8.5%, and the expected return on the market is 11%. SSS is in the 21% tax bracket and expects to be able to take full advantage of any interest tax shields. Assume common dividend next year of $3 and preferred dividend will remain at $3.10. Clearly write your work on a separate piece of paper. You will email immediately following the exam. Calculate the weight for common equity for SSS: (format your answer as 0.XXXXX with 5 places behind the decimal) Calculate the weight for preferred stock for SSS: (format your answer as 0.XXXXX with 5 places behind the decimal) behind the decimal) Calculate the weight for debt for SSS: (format your answer as O.XXXXX with 5 places sign). Provide WACC here. (Format your answer as X.XXXXX and do not include a decimal Sophie's Sandwich Shop, Inc. (SSS) has 4.2 million common shares outstanding and selling for $49 per share. SSS has 3.7 million shares of preferred stock outstanding selling for $34.50. The company has 110,000 outstanding bonds with a market price of 97.5 and coupon of 8% paid annually. The bonds mature in 7 years. In the space below, calculate the weights used for a WACC calculation. Investors, analysts and stakeholders all expect the future dividends of SSS to grow indefinitely by 5% per year. The stock has a beta of 1.58, the current risk-free rate is 8.5%, and the expected return on the market is 11%. SSS is in the 21% tax bracket and expects to be able to take full advantage of any interest tax shields. Assume common dividend next year of $3 and preferred dividend will remain at $3.10. Clearly write your work on a separate piece of paper. You will email immediately following the exam. Calculate the weight for common equity for SSS: (format your answer as 0.XXXXX with 5 places behind the decimal) Calculate the weight for preferred stock for SSS: (format your answer as 0.XXXXX with 5 places behind the decimal) behind the decimal) Calculate the weight for debt for SSS: (format your answer as O.XXXXX with 5 places sign). Provide WACC here. (Format your answer as X.XXXXX and do not include a decimal

Answer rating: 100% (QA)

1 Weight of common equity as follows Market Value of common equity Number of common sharesPri... View the full answer