You are the CFO of a company, and you need to analyze a new product line. The company has 5% coupon-bonds outstanding with $1000 face value that trade at par. Their stock, which trades at $125 on the NASDAQ has a beta of 1.75, plans to pay a dividend of $5.00 in one year, and the dividends are expected to grow at 8% annually, indefinitely. The company has a debt-to-equity ratio of 4 and pays taxes at the 35% annual tax rate. If the expected return on the market is 12% and treasury bills pay 2%, what is the weighted average cost of capital for this company? (assume no preferred stock) You will calculate each part of the WACC in the following questions. Please use 4 decimals throughout your calculations as well as in your answer. HINT: Use the debt-to-equity-ratio to find the weights; wd = DEBT/(Total Assets) and ws = EQUITY/(Total Assets). Use the technique (formula) we used back in Chapter 3. Find. 11.What is w_d? 2.What is w_p? 3.What is w_s? 4.What is r_d? 5.What is r_p? 6.What is r_s? 7.What is the firm's WACC?

[Ch 10] You are the CFO of a company, and you need to analyze a new product line. The company has 5% coupon-bonds outstanding with $1000 face value that trade at par. Their stock, which trades at $125 on the NASDAQ has a beta of 1.75, plans to pay a dividend of $5.00 in one year, and the dividends are expected to grow at 8% annually, indefinitely. The company has debt-to-equity ratio of 4 and pays taxes at the 35% annual tax rate. If the expected retum on the market is 12% and treasury bills pay 2%, what is the weighted average cost of capital for this company? (assume no preferred stock) You will calculate each part of the WACC in the following questions