Question
New Beginnings has the following capital structure; 7% First Mortgage Bonds $65,000,000 outstanding; 9% senior sub-ordinated Bonds $40,000,000 outstanding; Class A preferred stock paying 4.5%,
New Beginnings has the following capital structure; 7% First Mortgage Bonds $65,000,000 outstanding; 9% senior sub-ordinated Bonds $40,000,000 outstanding; Class A preferred stock paying 4.5%, $18,000,000 outstanding; Class B preferred stock paying 6.5%, $20,000,000 outstanding; Common Equity $93,000,000 outstanding paying 13.5%. Its tax rate is 36%.
a) What is New Beginnings WACC?
b) New Beginnings is considering the issuance of $27,000,000 project financing bonds for an up-coming capital project. The bonds will be priced at 7.8%. What is New Beginnings WACC with the new issue?
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Introduction To Corporate Finance
Authors: William L. Megginson, M.D. Lucey Brian C., Scott J. Smart, Scott B. Smart, Bill Megginson
1st Edition
184480562X, 9781844805624
