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Please help me complete this! I have been struggling for a while,and mainly I need the answer! Thank you! Give Kudos! Question 4 (30 points):
Please help me complete this! I have been struggling for a while,and mainly I need the answer! Thank you! Give Kudos!
Question 4 (30 points): Get-A-Life Inc. has the following securities outstanding: The firm has outstanding an issue of 11%, semi-annual coupon bonds, par value $1000 with 5 years remaining to maturity. The bonds currently sell at 110% of par. There are 10,000 bonds outstanding. The firm's common stock is currently selling at $50 per share. ValueLine reports the firm's beta as 1.5. The t-bill rate is 6% and the return on the S&P 500 is 11%. The firm's last dividend (Do) was $2.00 per share and dividends are expected to grow at a rate of 10% annually indefinitely. There are 2,000,000 common shares outstanding. The firm has no preferred stock in its capital structure. The firm's tax rate is 40%. Questions to be answered: (a) Calculate the costs of the components to be used in the WACC. [LT Debt and Common Equity (take average of 2 methods for common equity)] (b) Calculate the firm's market value capital structure. (c) Calculate the firm's WACC Step by Step Solution
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