Zeneda Inc. is estimating its WACC. You know the following information about the company's capital structure:...
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Zeneda Inc. is estimating its WACC. You know the following information about the company's capital structure: Bonds (Bonds are the only debt) 10 years maturity - 7% coupon, semiannually payable Preferred shares - 150,000 shares are outstanding - Annual dividend of $6 per share Common stock - 500,000 shares outstanding Book Value (in million $) 40 15 25 Market Value (in million $) 43 Further information - Dividend yield on preferred shares = 5% p.a. · Actual price per share = 78 Beta 1.3 Furthermore you know that the risk-free rate is 4% and the market risk premium is 6%. The company's marginal tax rate is 30%. Furthermore you know that the risk-free rate is 4% and the market risk premium is 6%. The company's marginal tax rate is 30%. 1. What is Zeneda's market value of preferred shares, expressed as a percentage of the total market value of (debt + preferred stock + common stock)? What is Zeneda's component cost of debt after taxes? What is Zeneda's component cost of common stock? What is Zeneda's WACC? Zeneda Inc. is estimating its WACC. You know the following information about the company's capital structure: Bonds (Bonds are the only debt) 10 years maturity - 7% coupon, semiannually payable Preferred shares - 150,000 shares are outstanding - Annual dividend of $6 per share Common stock - 500,000 shares outstanding Book Value (in million $) 40 15 25 Market Value (in million $) 43 Further information - Dividend yield on preferred shares = 5% p.a. · Actual price per share = 78 Beta 1.3 Furthermore you know that the risk-free rate is 4% and the market risk premium is 6%. The company's marginal tax rate is 30%. Furthermore you know that the risk-free rate is 4% and the market risk premium is 6%. The company's marginal tax rate is 30%. 1. What is Zeneda's market value of preferred shares, expressed as a percentage of the total market value of (debt + preferred stock + common stock)? What is Zeneda's component cost of debt after taxes? What is Zeneda's component cost of common stock? What is Zeneda's WACC?
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Answer rating: 100% (QA)
1 Dividend yield on preferred shares can be calculated as Annual dividend Share price 5 6 Share pric... View the full answer
Related Book For
Accounting Principles Part 1
ISBN: 978-1118306789
6th Canadian edition
Authors: Jerry J. Weygandt, Donald E. Kieso, Paul D. Kimmel, Barbara Trenholm, Valerie Kinnear, Joan E. Barlow
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