Question
Easy Car Corp. is a grocery store located in the Southwest. It plans to pay an annual dividend of $3.00 next year to its shareholders
Easy Car Corp. is a grocery store located in the Southwest. It plans to pay an annual dividend of $3.00 next year to its shareholders and plans to increase the dividend annually at the rate of 3.0%. It currently has 1,000,000 common shares outstanding. The shares currently sell for $20 each. Easy Car Corp. also has 30,000 semiannual bonds outstanding with a coupon rate of 9%, a maturity of 23 years, and a par value of $1,000. The bonds currently have a yield to maturity (YTM) of 9%. What is the weighted average cost of capital (WACC) for Easy Car Corp. if the corporate tax rate is 20%?
When answering this problem enter your answer using percentage notation but do not use the % symbol and use two decimals (rounding). For example, if your answer is 0.10469then enter 10.47; if your answer is 10%then enter 10.00
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started