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Card 19 ABC Company is located in Greece. That company wants to raise its capital that is why currently this company has issued corporate
Card 19 ABC Company is located in Greece. That company wants to raise its capital that is why currently this company has issued corporate bond. The corporate bond issue outstanding of the company is fixed interest rate 8% that pays interest rate quarterly and it will mature in 5 years. The bond is a $1500 face value and it is currently price at $1600. Additionally information, some financial services have a commission fees meaning that the company will have to pay a commission 1.5% of the selling price for a new bond issues. Besides this, the company will also issue preferred stock. Per share will be paid a dividend $8 by the company and per share market price is at $50. The flotation cost on preferred will amount to $10 per share. Apart from, the company's common stock is trading at $46 and its dividends are expected to grow at a constant rate of 8%. The company paid a dividend previous year of $3. The company decide to issue common stock but the company will have to pay a flotation cost per share equal to 4% of selling price. Addition to this, the company decided to use all of their expected retained earnings in the coming year. Therefore, the company's beta is estimated 0.85 by the SML and market risk premium is 5%. Greece treasury yield 8.32 %, Italy treasury yield 7.88%, and Germany treasury yield 3.25%. Athens General Composite monthly date. January 1202,43 point, February 1191,83 point, March 1205,30 point, April 1201,32 point, May 1132,34 point, June 1130,14 point, July 1134,36 point, August 1136,44 point, September 1121,65 point, October 1122,75 point, November 1122,41 point, December 1131,21 point. The company tax shield rate 10%. The company has an additional information below. Component Debt Preferred Stock $ 45,000,000 Balance Sheet Value Number outstanding| $ 150,000,000 150,000 1,500,000 Common Stock $ 180,000,000 4,500,000 Current Market Price $1,085 $45 $46 Calculate the cost of new debt, cost of equity, cost of preferred stock, the Dividend Growth Model and WACC for the firm.
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