Question
Given the following information for Quick Transport, please find the after tax WACC under the classical tax system. Assume the company's tax rate is 37%.
Given the following information for Quick Transport, please find the after tax WACC under the classical tax system. Assume the company's tax rate is 37%. Debt: 7500, 8.4% coupon bonds outstanding, $1000 par value, 22 years to maturity, selling for 103% of par, the bonds make semi-annual payments with the annual YTM of 8.1%. Ordinary shares: 195 000 shares outstanding, selling for $78 per share, beta is 1.05. Preference shares: 11 000 shares of 6.35% preference shares outstanding, currently selling for $60 per share. Market: 8% market risk premium and 5.1% risk-free rate.
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