Question
Given the following information for Electric Transport. Assume the company's tax rate is 34 percent. Debt: 7,500, 8.4 percent coupon bonds outstanding. $1,000 par value,
Given the following information for Electric Transport. Assume the company's tax rate is 34 percent. Debt: 7,500, 8.4 percent coupon bonds outstanding. $1,000 par value, 22 years to maturity, selling for 103 percent of par, the bonds make semiannual payments. Common Stock: 195,000 shares outstanding, selling for $78 per share, beta is 1.21. Preferred Stock: 11,000 shares of 6.35 percent preferred stock outstanding, currently selling for $76 per share. Market: 8 percent market risk premium and 5.1 percent risk-free rate. A. What is the weight of the firm's debt? B. What is the weight of the firm's preferred stock? C. What is the weight of the firm's common stock? D. What is the expected rate of return on the firm's debt? E. What is the expiated rate of return on the firm's preferred stock? F. What is the expected rate of return on the firm's common stock? G. What is the firm's WACC?
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