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what is the WACC for both problems Nso, its common stock currently sells for P0=$20.00 per share. The expected dividend payment of the common stock
what is the WACC for both problems
Nso, its common stock currently sells for P0=$20.00 per share. The expected dividend payment of the common stock is Di=$5.00 and the Iividend is expected to grow at a constant annual rate of g=5.00% per year. Mullens' target capital structure consists of ws=80.00% common stock, wd=10.00% debt, and wD=10.00% preferred stock, According to the video, the after-tax cost of debt can be stated as rd(1T). Plugging in the values for rd and (T) yields an after-tax cost of debt of approximately According to the video, the cost of preferred stock can be stated as Plugging in the values for Dp and Pp yields a cost of preferred stock of of approximately Hint: Assume no flotation costs: According to the video, the cost of common stock can be stated as Plugging in the values for D1,P0, and g yields a cost of common stock of approximately Recall that the equation for the weighted average cost of capital (WAAC) can be stated as: WAAC=(%ofdebt)(After-taxcostofdebt)+((5ofpteferredstock)(Costofpreferredstock)+(5ofCommonequity)(Costofcommonequity) Mullens estimates that it can issue debt at a rate of rd=30.00% and a tax rate of T=30.00%. It can issue preferred stock that pays a constant dividend of Dp=$15.00 per year and at PD=$60.00 per share. Also, its common stock currently sells for P0=$8.75 per share. The expected dividend payment of the common stock is D1=$3.50 and the dividend is expected to grow at a constant annual rate of g=10.00% per year. Mullens' target capital structure consists of w1=75.00% common stock, wd=15.00% debt, and wp=10.00% preferred stock. The after-tax cost of debt is approximately The cost of preferred stock is approximately The cost of common stock is approximately The waAC is approximately Step by Step Solution
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