Question
Consider the following information for Federated Junkyards of America. Debt: $85,000,000 book value outstanding. The debt is trading at 85% of book value. The yield
Consider the following information for Federated Junkyards of America.
- Debt: $85,000,000 book value outstanding. The debt is trading at 85% of book value. The yield to maturity is 9%.
- Equity: 3,500,000 shares selling at $52 per share. Assume the expected rate of return on Federateds stock is 18%.
- Taxes: Federateds marginal tax rate is Tc = 0.21.
Calculate the weighted-average cost of capital (WACC). (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)
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Financial Management For Public, Health, And Not-for-Profit Organizations
Authors: Steven A. Finkler, Daniel L. Smith, Thad D. Calabrese, Robert M. Purtell
6th Edition
150639681X, 978-1506396811
