You are trying to determine the WACC for Eagles, Inc. It has the following characteristics. Place...

 

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You are trying to determine the WACC for Eagles, Inc. It has the following characteristics. Place your work in Submissions by 11am on Thursday. 1. Discount rate of 9%. The company pays taxes at a 25% rate. 2. Preferred stock trading at a current total value of $200mm with a dividend payment of $5mm per quarter. 3. Accounts payable of $75mm 4. A 10-year senior bond was issued 3 years ago in the amount of $400mm. It is priced at 94 and is callable 8 years after issuance. The coupon rate is 6% paid semi-annually. There is no other debt outstanding. The bond is callabl9 at the end of year 8 (8 years after issuance) at a price of 103. 5. The common stock is priced at $80 per share and pays a dividend of $1.25 per share per quarter. Ten years ago, the dividend was $0.25 per share. The ten year treasury rate is 4%. The company's Beta is 1.75 and the market return for equities is 9%. There are 50mm shares authorized, 15mm shares issued, and 5mm shares of treasury stock. Questions: A. What is the cost of equity using the? a. CAPM approach b. Gordon Growth Model approach B. What is the cost of preferred stock? C. What is the cost of debt? a. Current yield, YTM, YTC, and YTW? b. Pre-tax After-tax c. D. What is the WACC (use the average of GGM and CAPM approaches)? You are trying to determine the WACC for Eagles, Inc. It has the following characteristics. Place your work in Submissions by 11am on Thursday. 1. Discount rate of 9%. The company pays taxes at a 25% rate. 2. Preferred stock trading at a current total value of $200mm with a dividend payment of $5mm per quarter. 3. Accounts payable of $75mm 4. A 10-year senior bond was issued 3 years ago in the amount of $400mm. It is priced at 94 and is callable 8 years after issuance. The coupon rate is 6% paid semi-annually. There is no other debt outstanding. The bond is callabl9 at the end of year 8 (8 years after issuance) at a price of 103. 5. The common stock is priced at $80 per share and pays a dividend of $1.25 per share per quarter. Ten years ago, the dividend was $0.25 per share. The ten year treasury rate is 4%. The company's Beta is 1.75 and the market return for equities is 9%. There are 50mm shares authorized, 15mm shares issued, and 5mm shares of treasury stock. Questions: A. What is the cost of equity using the? a. CAPM approach b. Gordon Growth Model approach B. What is the cost of preferred stock? C. What is the cost of debt? a. Current yield, YTM, YTC, and YTW? b. Pre-tax After-tax c. D. What is the WACC (use the average of GGM and CAPM approaches)?

Answer rating: 100% (QA)

A What is the cost of equity using the a CAPM approach ANSWER Cost of Equity ... View the full answer