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10. With the market and company data below calculate this company's WACC: MARKET DATA: U.S. Treasury Bill rate: 5.0% 5% Stock market total return: 13%.
10. With the market and company data below calculate this company's WACC: | ||||||
MARKET DATA: | ||||||
U.S. Treasury Bill rate: 5.0% | 5% | |||||
Stock market total return: 13%. | 13% | |||||
COMPANY DATA: | ||||||
Dividend growth rate: | 4% | |||||
Outstanding bond YTM: | 6% | |||||
Next years expected dividend: | $1.50 | |||||
Marginal tax rate: | 40% | |||||
Average tax rate: | 30% | |||||
Shares outstanding: | 100,000 | |||||
Beta: | 0.80 | |||||
Debt / capital ratio: | 20% | |||||
A. Cost of Debt: | ||||||
B. Cost of Equity: | ||||||
C. WACC (values): | ||||||
Cost | Wt | |||||
Debt | ||||||
Equity | ||||||
WACC | ||||||
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