The CFO of Wills Hornets Inc. is calculating the WACC of the company. She collects the...

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The CFO of Wills Hornets Inc. is calculating the WACC of the company. She collects the following facts: • The company's long-term bonds currently offer a yield to maturity of 8.0%. The company's stock price is $31.4 per share and will pay a dividend of $2 per share at the end of the year, and which is expected to grow at a constant rate of 6.0% per year. • The company preference shares currently trade at $44.1 per share and pay a preference dividend of 10.0% on a par value of $50. • The company's capital structure is 65.0% common equity, 10.0% preference shares, and 25.0% debt. • The company's tax rate is 41.5%. 1. What is the cost of equity? % (Give answer as % to 2 decimal places) 2. What is the cost of preference shares? % (Give answer as % to 2 decimal places) 3. What is the company's WACC? % (Give answer as % to 2 decimal places) The CFO of Wills Hornets Inc. is calculating the WACC of the company. She collects the following facts: • The company's long-term bonds currently offer a yield to maturity of 8.0%. The company's stock price is $31.4 per share and will pay a dividend of $2 per share at the end of the year, and which is expected to grow at a constant rate of 6.0% per year. • The company preference shares currently trade at $44.1 per share and pay a preference dividend of 10.0% on a par value of $50. • The company's capital structure is 65.0% common equity, 10.0% preference shares, and 25.0% debt. • The company's tax rate is 41.5%. 1. What is the cost of equity? % (Give answer as % to 2 decimal places) 2. What is the cost of preference shares? % (Give answer as % to 2 decimal places) 3. What is the company's WACC? % (Give answer as % to 2 decimal places)

Answer rating: 100% (QA)

SOLUTION To calculate the WACC of Wills Hornets Inc we need to first determine the cost of equity co... View the full answer