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You are given the following information concerning Parrothead Enterprises: Debt: 9,400 6.6 percent coupon bonds outstanding, with 21 years to maturity and a quoted
You are given the following information concerning Parrothead Enterprises: Debt: 9,400 6.6 percent coupon bonds outstanding, with 21 years to maturity and a quoted price of 105.00. These bonds have a par value of $1,000 and pay interest semiannually. Common stock: 245,000 shares of common stock selling for $64.90 per share. The stock has a beta of .94 and will pay a dividend of $3.10 next year. The dividend is expected to grow by 5.4 percent per year Indefinitely. Preferred stock: 8,400 shares of 4.70 percent preferred stock selling at $94.40 per share. Market: 11.6 percent expected return, a risk-free rate of 3.80 percent, and a 24 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.) Aftertax cost of debt % Cost of preferred stock 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.) WACC %
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