Question
Given the following information for Last Question Inc. Assume the corporate tax rate is 35%, 7% market risk premium and 4.5% risk free rate. Debt
Given the following information for Last Question Inc. Assume the corporate tax rate is 35%, 7% market risk premium and 4.5% risk free rate. Debt 8,000 6% coupon bonds outstanding, $1,000 par, 20 years to maturity, recently quoted at 127.1 making semi annual payment. Common Stock 210,000 shares outstanding, selling for $57 per share. The companies beta is 1.05 and they just paid a dividend of $1.02 which is consistent with their dividend growth target of 5%. Preferred stock 15,000 shares outstanding of 4 percent preferred stock ($100 par) currently selling for $72 per share.
I NEED help with B and C
A. What is the WACC? the WACC is 9.14%
B. if the the company did a 3-for-2 stock split of common shares, what would be the post split price and number of shares?
C. If the company was to issue new preferred shares ($100 par), what would the dividend have to be based on current market conditions?
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