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Mason Motors, Inc. is evaluating whether to build a new factory, and will need to calculate their WACC to use as the discount rate in
Mason Motors, Inc. is evaluating whether to build a new factory, and will need to calculate their WACC to use as the discount rate in their DCF analysis. The relevant data is as follows: The company has 650,000 shares of stock outstanding that is currently selling for $20 per share on the market. The stock has a Beta of 0.9. There are 4000 bonds outstanding that make semi-annual coupon payments with a Par Value of $1000, a Coupon Rate of 9.36%, 10 years until maturity, and are currently priced on the market at $1250. The company has 80,000 shares of Preferred Stock outstanding that are trading on the market for $25 per share. The Preferreds pay a quarterly dividend of 50 cents per share. The current yield on Treasury Bills is 1% The trailing 5-year return of the S&P 500 Index is 11.0% Question 1: What is the company's cost of common stock? Question 1: What is the company's cost of common stock? Multiple Choice 11.0% 10.9% 8.5% 10.0% Question 2: What is the company's cost of debt? Multiple Choice 3.0% 6.0% 14.0% 7.0% O Question 4: What is the company's WACC? Multiple Choice O 7.8% O 8.8% O 8.0% 9.4% Question 3: What is the company's cost of preferred stock? Multiple Choice O 4.0% 8.0% 2.0% 6.0% O O
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