Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

What is the company WACC if the capital structure is following: 6% preferred shares, 64% bonds and 30% common shares. Preferred shares pay 4,5% dividends

  1. What is the company WACC if the capital structure is following: 6% preferred shares, 64% bonds and 30% common shares.

Preferred shares pay 4,5% dividends on par 100 and has a market price of 90,00 euros.

Bond has 7 years to maturity, carries 4,6% coupon, payable 2x a year and currently trades at 1099,55 euros.

Stock trade at 12,19 , last dividend was 0,85 and it is expected that dividends grow by 5,5% annually. Correlation coefficient between stock and market is 0,85. German Bu-Bill rate is 0,2% and DAX index last year returned 14%. Companys stock has standard deviation of 20,9% and stock market std deviation was 14,8%.

Step by Step Solution

There are 3 Steps involved in it

Step: 1

blur-text-image

Get Instant Access to Expert-Tailored Solutions

See step-by-step solutions with expert insights and AI powered tools for academic success

Step: 2

blur-text-image

Step: 3

blur-text-image

Ace Your Homework with AI

Get the answers you need in no time with our AI-driven, step-by-step assistance

Get Started

Recommended Textbook for

Multinational Business Finance

Authors: David K. Eiteman, Arthur I. Stonehill, Michael H. Moffett

12th Edition

0136096689, 978-0136096689

More Books

Students also viewed these Finance questions

Question

Dont off er e-mail communication if you arent going to respond.

Answered: 1 week ago