Answered step by step
Verified Expert Solution
Link Copied!

Question

1 Approved Answer

You are given the following information about a company's capital: A. The share price is $57 and there are 2.5 million shares outstanding. The share's

You are given the following information about a company's capital:

A. The share price is $57 and there are 2.5 million shares outstanding. The share's recent annual dividend was $4.2 and the dividends are expected to grow indefinitely at 1.3% a year. Calculate the cost of common equity - to be scanned and sent. (4 points)

B. The company has 0.3 million preferred shares outstanding. They are priced at $52.4 and pay an annual dividend of $2.8. Calculate the cost of preferred shares - to be scanned and sent. (4 points)

C. The company has 22130 bonds outstanding. These bonds have a par value of $1000, mature in 9 years and pay semi-annually with a coupon rate of 4.4%. The market price of these bonds is $951.64. Assuming this represents all of the company's debt capital. Calculate the pre-tax cost of debt - to be scanned and sent. (4 points)

D. Calculate the company's weights of equity, preferred, and debt capital - to be scanned and sent. (4 points)

E. Given a corporate tax rate of 25%, what is the company's weighted average cost of capital? (4 points) Enter the value below.

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

More Books

Students also viewed these Finance questions