Question
You are given the following information concerning Parrothead Enterprises: Debt: 9,100 6.3 percent coupon bonds outstanding, with 24 years to maturity and a quoted price
You are given the following information concerning Parrothead Enterprises: |
Debt: | 9,100 6.3 percent coupon bonds outstanding, with 24 years to maturity and a quoted price of 104.25. These bonds have a par value of $1,000 and pay interest semiannually. |
Common stock: | 230,000 shares of common stock selling for $64.60 per share. The stock has a beta of .91 and will pay a dividend of $2.80 next year. The dividend is expected to grow by 5.1 percent per year indefinitely. |
Preferred stock: | 8,100 shares of 4.55 percent preferred stock selling at $94.10 per share. |
Market: | 11.9 percent expected return, a risk-free rate of 3.65 percent, and a 21 percent tax rate. |
What is the firm's cost of each form of financing? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) |
You are given the following information concerning Parrothead Enterprises: |
Debt: | 9,100 6.3 percent coupon bonds outstanding, with 24 years to maturity and a quoted price of 104.25. These bonds have a par value of $1,000 and pay interest semiannually. |
Common stock: | 230,000 shares of common stock selling for $64.60 per share. The stock has a beta of .91 and will pay a dividend of $2.80 next year. The dividend is expected to grow by 5.1 percent per year indefinitely. |
Preferred stock: | 8,100 shares of 4.55 percent preferred stock selling at $94.10 per share. |
Market: | 11.9 percent expected return, a risk-free rate of 3.65 percent, and a 21 percent tax rate. |
What is the firm's cost of each form of financing? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) |
1) After tax cost of debt
2) cost of preferred stock
3)Cost of equity
Calculate the WACC for the company. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) |
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