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Please show financial calculator method if possible The Clueless, Company is trying to determine its weighted average cost of captal for use in making a
Please show financial calculator method if possible
The Clueless, Company is trying to determine its weighted average cost of captal for use in making a number of investment decisions The firm's bonds were issued six years ago and have 12 years left unti maturity. They carried a 9 percent coupon rate, and are currently selling for $974. 50. The firm's preferred stock carries a $5.20 dividend and is currently solling at $43.25 per share Clueless Company's imvestment banker has stated that issue costs for now preferred will be 50 cents per share. The firm wit also need to sell new common stock to finance the projects it is now considering. Clueless Company's common stock is expected to pay a $1.85 per share dividend next year, and is expected to maintain an 8 percent growth rate for the foreseeable fufure The stock is currently priced at 545 per share, but new common stock will have flotation costs of 60 cents per share Required: 1. Calculate the costs of the various components of Clueless Company's capital. The firm's tax rate is 36 porcont. 2. Given the intormation about Clueless Company in the previous problem, calculate the company's weighted average cost of capital assuming that its new financing will consist of 40 percent debt, 40% new common stock and 20 percent preferred stock Step by Step Solution
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