QUESTION 3 MomCorp Inc. has the following balances in its capital accounts as of 12/31/X3: Long-term debt $65,000,000 Preferred stock 15,000,000 Common stock 40,000,000 Paid in excess 15,000,000 Retained earnings 37,500,000 Company's long-term debt is comprised of 20-year $1000 face value bonds issued 7 years ago at an 8% coupon rate. The bonds are now selling to yield 6%. Willerton's preferred is from a single issue of $100 par value, 9% preferred stock that is now selling to yield 8%. Willerton has 4 million shares of common stock outstanding at a current market price of $31. Assume the firm's cost of retained earnings is 17% and its marginal tax rate is 36%. Assume that the coupon payments are semi-annual. Calculate its WACC using its book-value-based capital structure ignoring flotation costs, Round the answer to two decimal places. Do not round your intermediate calculations. Do not include the "%". 96 Make the same calculation using the market value-based capital structure. Round the answer to two decimal places. Do not round your intermediate calculations. Do not include the "%". % QUESTION 4 Wayne Enterprises Corp. issued $100,9% preferred stock five years ago. The shares are currently selling for $86.70. Assuming Fuller has to pay flotation costs of 13.5%, what is the company's cost of preferred stock? Round the answer to two decimal places. Do not include the "%". QUESTION 3 MomCorp Inc. has the following balances in its capital accounts as of 12/31/X3: Long-term debt $65,000,000 Preferred stock 15,000,000 Common stock 40,000,000 Paid in excess 15,000,000 Retained earnings 37,500,000 Company's long-term debt is comprised of 20-year $1000 face value bonds issued 7 years ago at an 8% coupon rate. The bonds are now selling to yield 6%. Willerton's preferred is from a single issue of $100 par value, 9% preferred stock that is now selling to yield 8%. Willerton has 4 million shares of common stock outstanding at a current market price of $31. Assume the firm's cost of retained earnings is 17% and its marginal tax rate is 36%. Assume that the coupon payments are semi-annual. Calculate its WACC using its book-value-based capital structure ignoring flotation costs, Round the answer to two decimal places. Do not round your intermediate calculations. Do not include the "%". 96 Make the same calculation using the market value-based capital structure. Round the answer to two decimal places. Do not round your intermediate calculations. Do not include the "%". % QUESTION 4 Wayne Enterprises Corp. issued $100,9% preferred stock five years ago. The shares are currently selling for $86.70. Assuming Fuller has to pay flotation costs of 13.5%, what is the company's cost of preferred stock? Round the answer to two decimal places. Do not include the "%
