Business Finance CRN 16663 Daniela Murgula & 1 12/04/20 11:39 PM Homework: Chapter 14 Homework Save Score: 0 of 3 pts 6 of 665 complete HW Score: 72.73%, 8 of 11 pts P14-27 (similar to) Question Help (Weighted average cost of capital) As a member of the Finance Department of Ranch Manufacturing, your supervisor has asked you to compute the appropriate discount rate to use when evaluating the purchase of new packaging equipment for the plant. Under the assumption that the firm's present capital structure reflects the appropriate mix of capital sources for the firm, you have determined the market value of the firm's capital structure as follows: To finance the purchase, Ranch Manufacturing will sell 10-year bonds paying interest at a rate of 6.6 percent per year with semiannual payment) at the market price of $1,046 Preferred stock paying a $2.04 dividend can be sold for $24 76. Common stock for Ranch Manufacturing is currently selling for $64 42 per share and the firm paid a $2 93 dividend last year. Dividends are expected to continue growing at a rate of 5.5 percent per year into the indefinite future. If the firm's tax rate is 30 percent, what discount rate should you use to evaluate the equipment purchase? a. Calculate component weights of capital The weight of debt in the firm's capital structure is 34,38 % (Round to two decimal places.) Homework: Chapter 14 Homework Sa Score: 0 of 3 pts 6 of 6 (5 complete) HW Score: 72.73%, 8 of 11 P14-27 (similar to) Question Help (Weighted average cost of capital) As a member of the Finance Department of Ranch Manufacturing, your supervisor has asked you to compute the appropriate discount rate to use when evaluating the purchase of new packaging equipment for th plant. Under the assumption that the firm's present capital structure reflects the appropriate mix of capital sources for the fire you have determined the market value of the firm's capital structure as follows: D To finance the py er year (with semiannual payr Data Table X 25:94. Com stock for Ranch Data Table Year Dividend are expected to is 30 percen what discount rat a. Calculate con The weight of de Source of Capital Bonds Preferred stock Common stock Market Values $3,900,000 $2,500,000 $5,900.000 Print Done Enter your answer in the answer box and then click Check