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Please no excel and please explain what formulas where used at each step! thank you in advance! Q4. (20 Points) Gold Sharks company hired you

Please no excel and please explain what formulas where used at each step! thank you in advance! image text in transcribed
Q4. (20 Points) Gold Sharks company hired you as a consultant to estimate the company's WACC. The firm's target capital structure is 30.5% Debt, 13.1% Preferred stock and 56.4% Common Equity. The Firms noncallable bonds mature in 15 years. The bonds have a 9.5% annual coupon rate, a par value of $1,000 and a market price of $1,135. Bonds pay coupon payments semi annually. The firm has 200,000 bonds outstanding. The firm has 7%, $100 par value preferred stocks. There are 1M shares outstanding. The preferred stock currently sells at $98 per share. Common Equity investors bond yield risk premium 6%. Risk free rate is 2.25%, market risk premium 10.5% and common stock beta is 1.15. Company's tax rate 30%. The firm has 20M shares outstanding of common stocks that sell at $21 per share. The firm just paid a dividend of $1.80 per share and the constant growth rate is expected to be 5.5% The firm would like to use the lowest of the three methods (Bond yield risk premium, CAPM and DCF) to estimate the cost of equity and it doesn't expect to issue new common stock. Calculate the WACC? Do not round your intermediate calculations

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