1.)

A firm is raising funds by selling a package of equity, debt and preferred stock.

The details of the package are:

1) Equity sold for $30 million. Expected perpetual dividends to buyers is $2.50 million per year.

2) Preferred stock sold for $15 million. Expected perpetual dividends to buyers is $0.8 million per year.

3) Debt sold, perpetual risk-free (guaranteed) coupon payments to be $6 million a year and is discounted at a rate of 4.40% per year.

Assume no taxes and other Modigliani-Miller assumptions also hold.

What is the WACC for the firm?

Round the answer to two decimals.

2.)

A firm has 10,000,000 shares outstanding with a price per share of $21.50 (previous to a share repurchase).

The firm repurchases 2,000,000 shares with a price per share of $26.90.

A share repurchase is a transaction whereby a company buys back its own shares from the marketplace. (As the repurchase price is greater than the market price, equity holders may sell shares to the firm only in proportion to their holding.)

What will the share price be after the share repurchase is completed?

Assume that Modigliani-Miller and its assumptions are true.

Round the answer to two decimals.

3.)

A firm has 10,000,000 shares outstanding with a price per share of $21.50 (previous to "Rights Issue").

It does a "Rights Issue" where it offers 2,000,000 shares to existing shareholders at a price of $16.10.

A rights issue is an invitation to existing shareholders to purchase additional new shares in the company.

The "Rights Issue" is fully subscribed, that is existing shareholders purchase all the shares offered.

What will the share price be after the dividend has been paid?

Round the answer to two decimals.

Assume that Modigliani-Miller and its assumptions are true.