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I got E wrong, not sure what I did wrong. Can you please help, thanks. Growth Company's current share price is $19.90 and it is
I got E wrong, not sure what I did wrong. Can you please help, thanks.
Growth Company's current share price is $19.90 and it is expected to pay a $1.05 dividend per share next year. After that, the firm's dividends are expected to grow at a rate of 440/0 per year. a. What is an estimate of Growth Company's cost of equity? b. Growth Company also has preferred stock outstanding that pays a $2.20 per share fixed dividend. If this stock is currently priced at $28.05, what is Growth Company's cost of preferred stock? c. Growth Company has existing debt issued three years ago with a coupon rate of 5.8%. The firm just issued new debt at par with a coupon rate of 6.1%. What is Growth Company's cost of debt? d. Growth Company has 5.2 million common shares outstanding and I .5 million preferred shares outstanding, and its equity has a total book value of $49.9 million. Its liabilities have a market value of $19.8 million. If Growth Company's common and preferred shares are priced as in parts (a) and (b), what is the market value of Growth Company's assets? e. Growth Company faces a 22% tax rate. Given the information in parts (a) through (d), and your answers to those problems what is Growth Company's WACC? Note: Assume that the firm will always be able to utilize its full interest tax shield. a. What is an estimate of Growth Company's cost of equity? The required return (cost of capital) of levered equity is 9.68 %. (Round to two decimal places.) x A) 9.68% B) 7.84% C) 6.196 D) $165.36 million b. Growth Company also has preferred stock outstanding that pays a $2.20 per share fixed dividend. If this stock is currently priced at $28.05, what is Growth Company's cost of preferred stock? The cost of capital for preferred stock is 7.84 %. (Round to two decimal places.) c. Growth Company has existing debt issued three years ago with a coupon rate of 5.8%. The firm just issued new debt at par with a coupon rate of 6.1%. What is Growth Company's cost of debt? (Select from the drop-down menus.) the YTM of the debt. Thus, the The pre-tax cost of debt is the firm's YTM on current debt. Since the firm recently issued debt at par, then the coupon rate of that debt must be equal to pre-tax cost of debt is 6.1% d. Grovfth Company has 5.2 million common shares outstanding and I .5 million preferred shares outstanding, and its equity has a total book value of $49.9 million. Its liabilities have a market value of S19.8 million. If Growth Comoanv's common and oreferred shares are oriced as in oar-ts (a) and (b). what is the market value of Growth Comoanv's assets?
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