Question: Yahoos capital structure weight for debt is 55%, and the bonds have a coupon rate of 6.4% and a yield-to-maturity of 6.7%. The capital structure
Yahoos capital structure weight for debt is 55%, and the bonds have a coupon rate of 6.4% and a yield-to-maturity of 6.7%. The capital structure weight for equity is 30%. The stock currently trades at $32 per share, the next dividend is expected to be $1.40 and dividends are expected to grow at 1.8%. The capital structure weight for Preferred Stock is 15%, it is currently selling for $22 a share, and pays dividends of $1.50 per year. If the average tax rate is 22% and the marginal rate is 30%. What is the firms weighted average cost of capital (WACC)?
| A) 1.85% | |
|
| B) 5.45% |
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| C) 6.56% |
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| D) 12.89% |
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| E) 18.34% |
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