Question
Q4: WXB Inc., whose tax rate is 25%, has 6.5 MM preferred shares outstanding, priced at $15 (dividend = $1.25), and 80 MM common
Q4: WXB Inc., whose tax rate is 25%, has 6.5 MM preferred shares outstanding, priced at $15 (dividend = $1.25), and 80 MM common shares outstanding, priced at $14. Its debt structure is split between LT bonds (10-year bonds, coupon rate = 6%, issue/quoted price = $920) and debt, totaling $120 MM and $150 MM, respectively. WXB Inc.'s stock beta is 1.5, and the underlying stock market's return = 10%. If the risk-free rate = 4%, what is WXB Inc.'s weighted average cost of capital?
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Federal Taxation 2016 Comprehensive
Authors: Thomas R. Pope, Timothy J. Rupert, Kenneth E. Anderson
29th Edition
134104374, 978-0134104379
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