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You are given the following information concerning firm F. Calculate the company's weighted average cost of capital (WACC). Debt: 13,000 6.4% coupon bonds outstanding, with
You are given the following information concerning firm F. Calculate the company's weighted average cost of capital (WACC). Debt: 13,000 6.4% coupon bonds outstanding, with 5 years to maturity. The face value of the bond is $1,000 and the current yield to maturity (YTM) of the bonds is 8%. These bonds pay interest semi-annually. Common stock: 345,000 shares of common stock selling for $76.50 per share. The stock has a beta of 0.9 and will pay a dividend of $3.80 next year. The dividend is expected to grow by 5% per year indefinitely Preferred stock: 10,000 shares of preferred stock selling at $86 per share. Each share pays a dividend of $4.4 per year. Market: 11% expected return, risk-free rate of 3.6%, and a 22% tax rate
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