Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

excel calculations are okay Peter's Audio has two bond issues outstanding. The first issue has a coupon rate of 7 percent, a par value of

image text in transcribedexcel calculations are okay

Peter's Audio has two bond issues outstanding. The first issue has a coupon rate of 7 percent, a par value of $2,000 per bond, matures in 20 years, has a total face value of $5 million, and is quoted at 105 percent of face value. The second issue has a coupon rate of 9 percent, a par value of $1,000 per bond, matures in 30 years, has a total face value of $10 million, and is quoted at 110 percent of face value. Both bonds pay interest semiannually. The firm has 105,000 shares of common stock outstanding at a market price of $22 a share with the cost of equity of 10.5 percent. There are 25,000 shares of 2.45%-preferred stock selling for $35 each with a face value of $100. The tax rate is 21 percent. What is the weighted average cost of capital in percent? (Do not round intermediate calculations. Enter your final answer as a percent rounded up to two decimal places, without the percentage symbol (%))

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Students also viewed these Finance questions

Question

Definition of Conflict

Answered: 1 week ago