Question
The UVW Corporation has three bond issuances outstanding. Bond 1 is an annual bond with a $1,000 par value, $80 coupon payments, maturing in 8
The UVW Corporation has three bond issuances outstanding. Bond 1 is an annual bond with a $1,000 par value, $80 coupon payments, maturing in 8 years, and trades today at $1,107.60 with 120,000 bonds outstanding. Bond 2 is a semi-annual bond with a $10,000 par value, $295.00 coupon payments, maturing in 8 years, and trades today at $8,776.51 with 18,000 bonds outstanding. Bond 3 is a quarterly bond with a $1,000 par value, $15.50 coupon payments, maturing in 8 years and trades at $1,038.48 with 80,000 bonds outstanding. UVW has 1,400,000 shares of preferred stock outstanding paying a dividend of $6.30 with a share price of $51.50. UVW has 51 million shares of common stock outstanding with a reported beta of 1.30 that is trading at $18.25 and pays a dividend of $0.80 annually and expected sustained dividend growth of 3.70% for the foreseeable future. The expected return on the market is 9.50% and the risk-free rate is 3.50%. When measuring the expected return on equity, you decide to weight the return generated by CAPM at 70% and the Continuous Dividend Growth (Gordon Growth) model at 30%. The UVW Corporation is taxed at the 21% level.
What is the yield-to-maturity of Bond 2?
What is the market value of debt for Bond 3?
What is the Cost of Debt for the UVW corporation (do not round until the final answer)?
What is the Cost of Equity for the UVW Corporation (do not round until the final answer)?
What is UVW Corporation's Weight of Preferred (do not round until the final answer)?
What is the Cost of Equity for the UVW Corporation as calculated by the Continuous Dividend Growth (Gordon Growth) model (do not round until the final answer)?
What is the UVW Corporation's Weight of Debt (do not round until the final answer)?
What is the Weighted Average Cost of Capital for the UVW Corporation (do not round until the final answer)?
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