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please show the answer in a hand written format so that i can better understand the formulas used Question 1 You have been asked to
please show the answer in a hand written format so that i can better understand the formulas used
Question 1 You have been asked to estimate the weighted average cost of capital (WACC) for Germina Corp., a mid-cap Pharmaceutical company in New York. You have been provided with the following information. 1. Common Shares - the current market price of Germina's 100,000 common shares on the NYSE stock exchange is $3 per share. Germina just paid a dividend of $0.75 per share last year and the company's financial analysts have indicated that the dividends should grow at an average annual rate of 2% for the foreseeable future. 2. Preferred Shares - The Company also has 200,000 preferred shares that carry a stated dividend of $1.00 per share and have a current market price of $5 per share. 3. Germina has 1,500 $1,000 face value bonds outstanding that carry a 10% coupon rate, The Yield to Maturity is 8%. The bonds will mature in 20 years. Bond interest is paid semi-annually. Germina Corp's tax rate is 40%. d) Calculate Germina's Weighted Average Cost of Capital Step by Step Solution
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