Question
Compute the weighted average cost of capital given the information below. Book Value of Debt $2,500,000,000 Market Value of Debt $2,750,000,000 Book Value of Equity
- Compute the weighted average cost of capital given the information below.
| Book Value of Debt | $2,500,000,000 |
| Market Value of Debt | $2,750,000,000 |
| Book Value of Equity | $3,250,000,000 |
| Market Value of Equity | $4,000,000,000 |
| Dividend Johnson has just paid | $3.25 |
| Current stock price | $40.50 |
| Growth rate of dividends | 6% |
| Bond information | Coupon rate = 4%, maturity = 20 years, maturity value =$1,000 and the current price is $985.25. Assume interest is paid semiannually. |
| Flotation cost of equity | 4% |
| Flotation cost of debt | 2% |
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Foundations Of Financial Management
Authors: Stanley B. Block, Geoffrey A. Hirt, Bartley R. Danielsen
13th Edition
