Question
Weighted Average Cost of Capital [WACC} Questions are regarding Acme Company . This same information will apply for the following Questions: Use the information below
Weighted Average Cost of Capital [WACC}
Questions are regarding Acme Company.
This same information will apply for the following Questions:
Use the information below to calculate the Weighted Average Cost of Capital [WACC] for Acme Company.
The company has the following components of its capital structure:
DEBT: 22,750 bonds outstanding with a 6.5% coupon rate, paid annually.
Each bond has $1,000 par value with a 30-year stated maturity,
and were issued five years ago.
The bonds currently sell for 95% of par in the market.
PREFERRED STOCK:
There are 69,400 shares of preferred stock outstanding.
The shares sell for $92.81 in the market.
They pay an annual cash dividend of $6.85 per share.
COMMON STOCK:
There are 255,000 shares of common stock outstanding.
The shares sell for $83.25 in the market and pay an annual cash dividend of $2.35 per share.
The stock has a beta of 1.23.
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The company has a corporate tax rate of 30%.
The expected return of the Market; that is, the S&P500 is 10.12% per year.
T-bills are expected to return 2.58% per year.
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1A: Weight of debt in the capital structure?
1B: Weight of preferred stock in the capital structure?
1C: Weight of common stock in the capital structure?
1D: What is Acme's after-tax cost of debt?
1E: What is Acme's cost of preferred stock?
1F: What is Acme's cost of common stock?
1G: What is Acme's Weighted Average Cost of Capital [WACC}?
Please, please, please answer all parts of the question for Up Vote! PLEASE! THANK YOU!!
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