Question
The Jackson Corp is a large publicly listed company. The CFO has collected the following facts about the company: The yield on a government bond
The Jackson Corp is a large publicly listed company. The CFO has collected the following facts about the company:
The yield on a government bond is 2.6%.
It is believed that the risk premium of the firm is 2.6%.
The companys common stock price is $25.5 per share and recently paid a dividend of $2 per share, which is expected to grow at a constant rate of 1.8% per year.
The company preference shares currently trade at $58.6 per share and pay a preference dividend of 10.0% on a par value of $60
.The companys capital structure is 65.0% common equity, 10.0% preference shares, and 25.0% debt.
The companys tax rate is 40.0%.
Answer the following questions about Jackson Corp:
What's the company's cost of common equity? % (Give answer as % to 2 decimal places)
What's the company's cost of preferred equity? % (Give answer as % to 2 decimal places)
What's the company's before tax cost of debt? % (Give answer as % to 2 decimal places)
What is the companys after-tax WACC? % (Give answer as % to 2 decimal places)
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