Question
Assuming the tax rate is 40%, estimate Lightyears Weighted Average Cost of Capital. Do not implement the bond?yield?plus?risk?premium approach in the process. The following information
Assuming the tax rate is 40%, estimate Lightyears Weighted Average Cost of Capital. Do not implement the bond?yield?plus?risk?premium approach in the process. The following information regarding Lightyear Corp.s outstanding securities is available.
1.) 8 5 /8 % bonds: 10,000 bonds outstanding with 5 years to maturity, currently selling at $970.00 (coupons are paid semiannually)
2.) common stock: 1,000,000 shares outstanding; currently priced at $20/share; ?=1.20; next (annual) dividend expected to be $1.00/share; dividends expected to grow at 9.5% per year indefinitely.
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