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Harrington Enterprises You have been asked to calculate the weighted average cost of capital ( WACC ) for Harrington Enterprises. Here are some facts: ,
Harrington Enterprises
You have been asked to calculate the weighted average cost of capital WACC for Harrington
Enterprises. Here are some facts:
Marginal tax rate
Harrington semiannual bonds are trading at $ and have years left to mature.
Harrington preferred annual stock with par value is trading at $
Harrington's optimal capital structure is across debt, preferred stock and
equity, respectively.
Common stock for Harrington is trading at $ per share.
The last dividend paid by Harrington was $ and the growth rate in dividends is
expected to be indefinitely.
Harrington's beta is
The current Tbill yield is
The Market risk premium is five percent.
Harrington sometimes uses the bondyieldplusriskpremium approach. When it does, it
uses a risk premium of
If Harrington issues new common stick, the flotation costs will be fifteen percent.
$mil Harrington's current amount in the retained earnings account.
Please calculate showing all work:
a Harrington's component cost of debt
b Harrington's component cost of preferred stock.
c The NPV of project C which would cost $ today, and pay a cash flow of $ each
year over the next years.
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