Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

The BEAR Company has 2500 bonds outstanding that have a market price of $1195 each and a face value of $1000. floatation cost is 0.018

image text in transcribed

image text in transcribed

The BEAR Company has 2500 bonds outstanding that have a market price of $1195 each and a face value of $1000. floatation cost is 0.018 the bond pays coupon of 0.035 quarterly for 15 years. The company also has 6,000 shares of preferred stock at a market price of $37 and dividends 0.9 each par value 20 dollars. The common stock is priced at $26 a share it is undervalued by $1.5 and there are 200000 shares outstanding, par value is 5 dollars the stock is pays $2 and will continue to grow at a rate of 0.06 TAXES ARE 0.4 what is the cost of debt after tax? what is the cost of PS what is the cost of common stock? what is the weight of the bond according to book value method what is the weight of the stock according to book value method what is the weight of preferred stock according to book value method what is the WACC? use the book value method

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

Public Finance

Authors: Harvey S. Rosen

5th Edition

025617329X, 978-0256173291

More Books

Students also viewed these Finance questions

Question

What has their performance been in other/previous contracts?

Answered: 1 week ago