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Debt: 10,900 7.4 percent coupon bonds outstanding, with 21 years to maturity and a quoted price of 108.75. These bonds pay interest semiannually. Common stock:
Debt: | 10,900 7.4 percent coupon bonds outstanding, with 21 years to maturity and a quoted price of 108.75. These bonds pay interest semiannually. |
Common stock: | 320,000 shares of common stock selling for $66.40 per share. The stock has a beta of 1.05 and will pay a dividend of $4.60 next year. The dividend is expected to grow by 5.4 percent per year indefinitely. |
Preferred stock: | 9,900 shares of 4.70 percent preferred stock selling at $95.9 per share. |
Market: | A 10.1 percent expected return, a 5.4 percent risk-free rate, and a 40 percent tax rate. |
Required: |
Calculate the WACC for Parrothead Enterprises. |
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