Question
FINA Incs assets are $500 million, financed through bank loans, bonds, preferred stocks and common stocks are: bank loans $100 million borrowed at 9% bonds
FINA Incs assets are $500 million, financed through bank loans, bonds, preferred stocks and common stocks are:
bank loans $100 million borrowed at 9%
bonds $180 million paying 9% coupon with semi-annual payments, and maturity of 5 years. FINA sold its $1,000 par-value bonds for $940 and had to incur $40 flotation cost per bond
preferred stocks $20 million paying $15 dividends per share FINA sold its preferred shares for $210 and had to incur $10/share flotation cost
Common stocks $200 million, the beta of FINA stocks is 1.2, the 90 day treasury yield is 1%, return on market portfolio is 12%
if FINA is subject to 40% tax rate what is the WACC for FINA?
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