A company has 1,000,000 shares of common stock outstanding, and the current market price is $50 per share The company has also issued 20 000 bonds (S1,000 maturity value each), which are presently selling in the market at $980 each The bonds are selling at a yield of 11 percent the company expects ...

Market value weights Bonds 20000 x 980 19600000 28 Common ...

A company has 1,000,000 shares of common stock outstanding, and the current market price is $50 per

Question:

A company has 1,000,000 shares of outstanding, and the current market price is $50 per share. The company has also issued 20.000 bonds (S1,000 value each), which are presently selling in the market at $980 each. The bonds are selling at a yield of 11 percent; the company expects to pay a of $3 per share in the coming year, and the is expected to grow at 8 percent per year. The company is in the 40 percent tax bracket. What is the weighted average cost of capital?
Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their... Maturity
Maturity is the date on which the life of a transaction or financial instrument ends, after which it must either be renewed, or it will cease to exist. The term is commonly used for deposits, foreign exchange spot, and forward transactions, interest...