Question 8 : Clovechok Petroleum has the following capital structure on its Statement of Financial Position:

Bonds, 6% coupon annually, 15 years to maturity 4,000,000

Preferred shares, 9% dividend rate 1,750,000

Common shares 250,000 shares outstanding 4,000,000

Retained earnings 2,000,000

Total 11,750,000

New debt can be issued to yield 10%, with flotation costs being 2%

New preferred shares would require a yield of 12%, with after tax flotation costs of 3%

Common shares are currently trading at $20.00; however, new shares would be sold at $19.80 and also incur 7% after tax flotation cost. The expected dividends in the coming year will be $3.50. The growth rate is 6%.

The risk free rate = 4.6%, the market return = 18.60% and Beta = 1.35

Clovechok's tax rate is 38% and would require new common shares to fund new investments.

What is the value of Kd? Round to 2 decimal places. No % required.

What is the value of Kp? Round to 2 decimal places. No % required.

What is the value of Kn? Round to 2 decimal places.

What is the market value of the bonds? Round to the nearest dollar. No dollar sign and no commas. Example.... 1050653

What is the market value of the preferred shares? No dollar sign and no commas. Example.... 1050653

What is the market value of the common shares? No dollar sign and no commas. Example.... 1050653

Let's pretend that I gave you the following information:

Kd = 7%

Kp = 9%

Kn = 13%

Bonds Market Value = $2,000,000

Preferred Share Market Value = $3,000,000

Common Share Market Value = $5,000,000

What is the value of WACC? Round to 2 decimal places. No %. Example... 11.50