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Please help!!! Part I: WACC Use this information to answer questions 1-8 Suppose Intel wants to raise capital to start a new project to bring
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Part I: WACC Use this information to answer questions 1-8 Suppose Intel wants to raise capital to start a new project to bring their manufacturing process back to the U.S. The pandemic has shown them that they cannot rely on a foreign supplier. The CEO asks you to calculate their weighted average cost of capital. He gives you these facts. Tax rate = 12.5% Intel has the following bonds all have a face value of $1,000: 5-year, 4.6% coupon, semiannual payment non-callable bonds with a price of $1,016. 20 year, 6.2% coupon semiannual payment callable bonds with a price of $1,035. And 20 year, 5.9 % coupon semiannual payment non-callable bonds with a price of $1,018. New bonds will be privately placed with no flotation cost. Intel has preferred stock that sells for $125.00. It pays an annual dividend of $4.67. Their common stock sells for $59.26. The annual dividend is $1 32 and the dividend growth rate is 2.4% a year. The stock has a Beta of 80. The risk free rate is 1% and the market risk premium is 4.6% Intel considers their bond-Yield Risk Premium to be 3%. Intel currently has 30% of their capital coming from debt, 20% from preferred stock and 50% from common equity, however their target is to have 38% from debt, 18% from preferred stock and 44% from common equity. QUESTION 3 What is the after-tax cost of debt for Intel? A. 5.03% OB.5.17% OC. 6.63% OD.2.21% QUESTION 4 What is Intel's cost of preferred stock? O A. 26.76% OB.16.23% O C. 7.16% OD.3.74% QUESTION 5 What is Intel's cost of common equity if we use the CAPM method? A. 3.88% B. 4.68% OC. 6.31% OD.7.5% QUESTION 6 What is Intel's cost of common equity if we use the DCF method? O A. 10.47% B. 8.63% OC. 4.68% OD.2.24% QUESTION 7 What is Intel's cost of common equity if we use the bond yield plus risk premium method? O A. 8.03% OB. 8.75% OC. 9.23% OD. 10.03% QUESTION 8 What is Intel's WACC? A. 4.22% B. 4.31% OC.5.24% OD.5.45% Step by Step Solution
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