The ICBM Corporation has provided you with the following information: a. The debt structure of the firm
Question:
The ICBM Corporation has provided you with the following information:
a. The debt structure of the firm consists of 10,000 bonds with a face value of $100, a coupon rate of 5% and a price of $90.00 and 10 years to maturity. Assume semi-annual coupon payments and a yield to maturity of 5.10%.
b. 400,000 ordinary shares selling for $90 per share. The shares have a beta of 1.30 and a dividend of $5.00 will be paid next year. The dividends are expected to grow at 5% forever.
c. 35,000 preference shares selling at $100.00 per share and paying a 7% dividend.
d. The stock market has an expected return of 13%, the risk free rate is 4% and the tax rate is 30%.
Calculate ICBM Corporation's weighted average cost of capital (WACC).
Introduction To Federal Income Taxation In Canada
ISBN: 9781554965021
33rd Edition
Authors: Robert E. Beam, Stanley N. Laiken, James J. Barnett