Question
you have the following information:- Market Info:- Real interest rate = 2.0%; Expected inflation = 4.0%; Rm = 12.0%; Tax = 30.0%. Com. Stock info:-
you have the following information:-
Market Info:- Real interest rate = 2.0%; Expected inflation = 4.0%; Rm = 12.0%; Tax = 30.0%.
Com. Stock info:- Par value = $1.0 ; Market value (price) = ?? ; Beta = 1.60 ; No. of outstanding shares = 1,000,000.0 ; EPS $3.0 ; pay-out ratio = 30.0%;
Growth in EPS & Dividends = 5.0% ;
Preferred Stock info:- Par value = $100.0; Dividend per share = 10.0%; Rp=8.0%; No. of outstanding shares = 100,000.0; Price = ????
Bonds info:- Par value = $1,000.0; Coupon interest = 4.0% ; YTM = 6.0%; Time to maturity = 20 years ; No. of bonds = 100.0; Price = ???
1- Calculate the WACC using historical weights in the capital structure.
2 - Calculate the WACC using market weights in the capital structure
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