Question
Marie Corp. has $1,882 in debt outstanding and $2,269 in common stock (and no preferred stock). Its marginal tax rate is 30%. Marie's bonds have
Marie Corp. has $1,882 in debt outstanding and $2,269 in common stock (and no preferred stock). Its marginal tax rate is 30%. Marie's bonds have a YTM of 5.6%. The current stock price (Po) is $45. Next year's dividend is expected to be $2.26, and it is expected to grow at a constant rate of 7% per year forever. The company's W.A.C.C. is ____%. Round your final answer to 2 decimal places (example: enter 12.34 for 12.34%), but do not round any intermediate work in the process.
Badger Corp. has an issue of 6% bonds outstanding with 6 months left to maturity. The bonds are currently priced at $1,000.57, and pay interest semiannually. The firm's marginal tax rate is 40%. The estimated risk premium between the company's stock and bond returns is 4%. The firm's expects to maintain a capital structure with 40% debt and 60% equity going forward. The company's W.A.C.C. is ____%. Round your final answer to 2 decimal places (example: enter 12.34 for 12.34%), but do not round any intermediate work in the process.
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