Question
Inzaghi Company recently hired you as a consultant to estimate the companys WACC. You have obtained the following information. (1) The company has noncallable bonds
Inzaghi Company recently hired you as a consultant to estimate the companys WACC. You have obtained the following information. (1) The company has noncallable bonds with $1,000 face value and coupon rate of 10% (paid semi-annually). The bonds mature in 4 years, and have current price of $1,140. (2) The companys tax rate is 30%. (3) The current price of the companys stock is $80.00 per share. Dividends are expected to grow at 5% indefinitely and the most recent dividend paid by the company was $2.75 per share. (4) The target capital structure of the company consists of 41.5% debt and the balance is common equity. (5) The company is not planning to issue any new common stock. What is Inzaghi Companys WACC? ** You must explain your approach in writing in four lines
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started