Content P11.1 Measuring the Weighted X Upload Documents for Free A Q screenshot on mac - Search + chegg.com/homework-help/questions-and-answers/p111-measuring-weighted-average-cost-capital-calculate-weighted-average-c... Imported csu Poker Now - Poker... T New Chrome available : All Bookmarks Chegg Home > Recent My stuff Perks > P11.1 Measuring the Weighted Average Cost of Capital: Calculate the weighted average cost of capital using both Equations 11.1 and 11.2. Assume the company's securities are publicly traded, that its debt is currently trading at 100% of par value, and that its preferred stock is currently trading at 110% of its par value. The company's stock price is currently $8 per share, and the company has 5,000 shares of stock outstanding, which is net of 1,000 treasury shares. The risk-free rate is 4%, and the market risk premium is 6%. The company issued the debt and preferred stock at par value. The company has an equity beta equal to 1.5. The company has an effective interest rate equal to 7.5%, which includes an 0.5% default premium, and the cost of capital for the preferred stock is equal to 7.5%. The income tax rate on all income is 40%. The company plans to have a constant capital structure strategy based on its current capital structure ratios. The company's income statement and balance sheets are given below. Income Statement Revenue. Operating expenses. Depreciation expense.. Earnings before interest and taxes.. Interest expense.... Income before taxes. Income tax expense. Net income.. Balance Sheet Year 1 Year 2 $12,000 -6,000 -5,200 $ 800 -450 $ 350 -105 $ 245 Total current assets Property, plant, and equipment (net). Total assets... Accounts payable.. Debt.. Total liabilities. Preferred stock. Capital stock Retained earnings Shareholders' equity Liabilities and shareholders' equity $ 2,000 $ 3,000 12,000 12,000 $14,000 $15,000 $ 1,000 6,000 $ 7,000 $ 4,400 5,000 -2,400 $ 7,000 $14,000 $ 1,000 6,000 $ 7,000 $ 4,600 5,000 -1,600 $ 8,000 $15,000 Join now EN Excel File Edit View Insert Format Tools Data Window Help AutoSave 2 Home Insert Draw GA - Clipboard F58 A Font C Ch 11 Assignment(1) (1) Page Layout Formulas Data >>> Comments Share % Conditional Formatting Format as Table Alignment Number Cells Editing Sensitivity Cell Styles fx B E F G H I J 28 First, find the capital structure ratios. 29 30 Share price 31 # Shares outsanding 32 #Treasure shares 33 Bond price 34 Preferred price 35 36 Market Value of Equity 37 Market Value of Debt 38 Market Value of Preferred: 39 40 Market Value of Firm 41 42 Debt to Value 43 Preferred to Value 44 Equity to Value 45 46 47 $ 8.00 5,000 1,000 100 110 0.0% 48 Then, estimate the weighted average cost of capital and unleverd cost of capital. 49 50 Risk-Free Rate 4.00% 51 Market Risk Premium 6.00% 52 Equity Beta 1.5 53 Yield on Debt 7.50% 54 Default premium 0.50% 55 Income Tax Rate 30.00% 56 57 Equity Cost of Capital 58 59 Cost of Debt 60 61 Cost of Preferred 7.50% 62 63 Weighted Average Cost of Capital 64 65 Unlevered Cost of Capital 66 67 20 Instructions & Signature P11.1 Ready Accessibility: Good to go APR 29