Question
Information on Gerken Power Co., is shown below. Assume the company's tax rate is 38%. Debt: 8,800 8.1% coupon bonds outstanding, $1,000 par value, selling
Information on Gerken Power Co., is shown below. Assume the company's tax rate is 38%.
Debt: 8,800 8.1% coupon bonds outstanding, $1,000 par value, selling for 103.5% of par, and YTM OF 7.7%.
Common Stock: 213,000 shares outstanding, selling for $83.30 per share; beta is 1.18.
Preferred Stock: 12,300 shares of 5.9% preferred stock outstanding, currently selling for $97.70 per share.
Market: 7.15% market risk premium and 4.95% risk-free rate.
A. What is the market value of the firm?
B. What is the company's cost of each form of financing?
C. Calculate the company's WACC?
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Microfinance For Bankers And Investors Understanding The Opportunities And Challenges Of The Market At The Bottom Of The Pyramid Part 1 Understanding Clients The Market And The Opportunities
Authors: Elizabeth Rhyne
1st Edition
0071732985, 9780071732987
