Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

Question 1- Use the information below on Kellogg Co. (K) to calculate the market value of debt, equity, and preferred shares. Then i find the

image text in transcribed
Question 1- Use the information below on Kellogg Co. (K) to calculate the market value of debt, equity, and preferred shares. Then i find the weights of each within the company's capital structure and the cost of debt, equity, and preferred shares to determined Kellogg's weighted average cost of capital. (15 points) INPUTS OUTPUTS Market Values Debt 05/02/22 Settlement date Maturity date Market value of debt Market value of equity 05/02/32 79,410,000 65,075,000 $ 75,000,000 55,000 Book value of bonds Annual coupon rate Market value of preferred stock Total market value of the firm 8,45% 144,540,000 Face value (% of par) 100.00 Coupons per year 2 Weights Bond price (% of par) 105,88 Weight of debt Weight of equity Weight of preferred stock Common stock. 950,000 Shares outstanding Beta 0.57 Cost of Debt 68.50 Pretax cost of debt Share price ($) After-tax cost of debt Preferred stock Shares outstanding 55,000 Cost of Equity 3.81 Cost of common stock Coupon amount Share price ($) 60.92 Cost of Preferred Cost of preferred stock Market Market risk premium 9.1% 3.2% Weighted Average Cost of Capital Risk-free rate 21.0% WACC Tax rate IN F22 F16+ 0.549 0,450 0.000 7.60% 6.00 % 6.25%

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Liquidated An Ethnography Of Wall Street

Authors: Karen Ho

1st Edition

0822345994,0822391376

More Books

Students also viewed these Finance questions

Question

What are the main elements of green strategy and sustainability?

Answered: 1 week ago

Question

please try to give correct answer 4 7 3 .

Answered: 1 week ago