Question
ULowell Co. located in the USA is is selling hot dogs. The president is Denny and its brand name is Denny's FAT dog. The company
ULowell Co. located in the USA is is selling hot dogs. The president is Denny and its brand name is Denny's FAT dog. The company raised money from many different ways (sources); it issued $180 by issuing common stock. company's beta is estimated to be 1.2 and the market return is 7.5% and the risk free rate is 2.5%. Also, Denny issued a prefered stock with divident of $1.05, which is fixed forever with the current preferred stock price of $15. The company raised $30 with preferred stock, meaing the value of total preferred stock is $30. The company also issued a bond with face value of $100 (not 1,000. be careful.) with the coupon rate of 6% and maturity is 20 years and it pays interest semi-annually. It has one bond issued with price of $90, meaning that value of bond (Debt) is $90 (even though the fave value is $100) Denny is expected to pay the first divident (D1) of $1 and the company is expected to grow at a constrant rate of 3%. The current common stock price P0) is $20 and its tax rate is 25%. Answer in percent for all. For example, if the answer is 8.50%, then just write 8.50 without any symbol.
what is the company's (After tax) WACC if you use the CAPM for common stock?
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