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Answer urgently required. 11 . The capital structure of Delta PLC has a debt of 30%, preferred stock is 15%, and common stock 55%, which
Answer urgently required.
11 . The capital structure of Delta PLC has a debt of 30%, preferred stock is 15%, and common stock 55%, which is considered optimal. The tax rate is 40% Investors expect earnings and dividends to grow at a constant rate of 9% in the future. Delta PLC paid a dividend of Rs 5.00 per share last year and its stock currently sells for Rs 98 per share. One-year Treasury bonds yield is 7%, the market risk premium is 5%, and Delta PLC's beta is 1.4. The following terms would apply to new security offerings Preferred: New preferred stock could be sold to the public for Rs 120 per share, I with a dividend of Rs 7. Debt Currently outstanding 11% coupon bonds have a yield to maturity of 12% Delta PLC believes it could issue new bonds at par that would provide a similar yield to maturity Common: New common equity will be raised only by retaining earnings a. Find the component costs of debt, preferred stock and common stock b. What is the WACC)Step by Step Solution
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