1 . WACC calculation You are analyzing a Corporation s capital structure. It has the following issues...
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Question:
WACC calculation
You are analyzing a Corporations capital structure. It has the following issues of capital. The company can NOT use the tax shelter. Determine the WACC and its parts.
Common Stock:
million shares of Class A trading at $ with a Beta of
The current riskfree rate is
The current market return on similar stocks is
Preferred Stock:
million shares trading at $
$ dividend
Bonds:
series s years to maturity, trading currently at in todays bond market $ face value with a coupon with coupon payments made semiannually
series s years to maturity, trading currently at in todays
bond market $ face value with a coupon with coupon payments made annually
o What is the value of the common Equity and what of the total capital structure does this represents?
o What is the value of the preferred Stock and what of the total capital structure does this represents?
o What is the value of the Debt and what of the total capital structure does this represents?
o What is the overall value of the companys capital?
o What is the cost rate of the common Equity?
o What is the cost rate of the preferred Stock?
o What is the cost rate of the Debt?
o What is the Weighted Average Cost of Capital for this company?
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