Question
PLEASE HELP *URGENT* THANK YOU 3. Company AFLAC had issued a 15-year coupon bond with 8% coupon rate on the face value as $1,000 and
PLEASE HELP *URGENT* THANK YOU
3. Company AFLAC had issued a 15-year coupon bond with 8% coupon rate on the face value as $1,000 and with semi-annual payments. Answer the following questions: (200000 shares of common stock, 800000 shares of preferred stock issues)
a) Suppose the discount rate for the bond is given as 12%, what is the present value of the bond?
b) Suppose the current market price of the bond is given as $906 per bond, what is the current market discount rate (or so called Yield to Maturity) for the bond?
c) The company also issued a common stock of $0.65 dividend with 10% growth rate for the coming 3 years and possibly smoothed out toward 5% from the 4th year and on. There is also one preferred stock issued with preferred dividend as $1.2 and preferred stock price as $10 per share. The current common stock price is $14.20/ per share, the corporate income tax rate is 25%. What is the Weighted Average Cost of Capital (WACC) for Company AFLAC?
d) What are the assumptions for Weighted Average Cost of Capital (WACC)?
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