Question
Stephanos Structures Limited (SSL) has common stock outstanding with a current share price of $58, and a book value per share of $6. Dividends
Stephanos Structures Limited (SSL) has common stock outstanding with a current share price of $58, and a book value per share of $6. Dividends paid by the company for the last number of years are given in the table below; the most recent dividend received by the common shareholders was $3.40 in 2021. Year 2021 2020 2018 2019 $3.05 Dividend $3.40 $3.25 $2.75 SSL also has one bond issue outstanding with an 8% coupon (semi-annual payments), and selling for 98.5% of par. The issue matures in 6 years The company's tax rate is 35% and the debt-to-equity ratio of 0.6. a) Calculate SSL's cost of debt. (6 marks) b) Calculate SSL's cost of equity (5 marks) 2017 $2.50 c) What are SSL's capital structure weights? (2 marks) d) What is SSL's Weighted Average Cost of Capital (WACC)? (2 marks)
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Equity Asset Valuation
Authors: Jerald E. Pinto, Elaine Henry, Thomas R. Robinson, John D. Stowe, Abby Cohen
2nd Edition
470571439, 470571438, 9781118364123 , 978-0470571439
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