Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

FGH company has a current share price of $44 and a total of 19 million shares outstanding. The company currently has debt with a total

FGH company has a current share price of $44 and a total of 19 million shares outstanding. The company currently has debt with a total present value of $885 million. These outstanding bonds are currently priced to yield 4.9% while quoting at 88.5% of total face value. The company recently paid a dividend to common stock holders of $4.08 and anticipates growing the dividend at a constant rate of 6% per year indefinitely. If the corporate tax rate is 30%, what is the weight(percent) of equity of FGH Company?

The correct answer is one of the options below:

48.58%

46.78%

49.48%

50.38%

51.42%

47.68%

45.88%

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access with AI-Powered 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