Question
Rocket Rentals LLC recently hired you as a consultant to estimate the company's WACC. You have obtained the following information (1) The firm has non-callable
Rocket Rentals LLC recently hired you as a consultant to estimate the company's WACC. You have obtained the following information
(1) The firm has non-callable bonds that mature in 15 years, have a 5.5% annual coupon, a par value of $1,000, and are currently trading on the market for $1,135 (2) The company's tax rate is 22% (3) The market risk premium is 8.5%, the risk free rate is 2.25%, and the company's beta is 1.20. (4) Preferred stock currently trades at $60 and has a divided of $4.50 per share (5) The target capital structure is 35% debt, 10% preferred stock, and 55% common stock
What is the pre-tax cost of debt? please round two decimal points. Example, you calculate the cost of debt as .03698 then you enter 3.7%
n | |
i | |
PV | |
PMT | |
FV |
What is the cost of common stock? please list as a percentage and round two decimal points. For example .17383 you would enter 17.38%
What is the cost of preferred stock?
What is the WACC?
Step by Step Solution
There are 3 Steps involved in it
Step: 1
Get Instant Access to Expert-Tailored Solutions
See step-by-step solutions with expert insights and AI powered tools for academic success
Step: 2
Step: 3
Ace Your Homework with AI
Get the answers you need in no time with our AI-driven, step-by-step assistance
Get Started