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Your company has 14 million shares of common stock outstanding. The common stock currently sells for $34 per share and has a beta of 1.15.
Your company has 14 million shares of common stock outstanding. The common stock currently sells for $34 per share and has a beta of 1.15. The market risk premium is 11.5 percent and T-bills are yielding 7.5 percent. Use the T-bill yield for the risk-free rate. The company has 900,000 shares of preferred stock outstanding. The preferred stock currently sells for $80 per share and pays 9 percent dividend for each $100 face value. The company also has 210,000 (semi-annual) bonds outstanding with a 10% percent interest rate and par value $1,000 each. The bonds have 17 years to maturity and sell for 91 percent of the par. The companys average tax rate is 32 percent. Answer the following questions: PLEASE SHOW ALL WORK THANKS!!!!!! 1. What is the cost of common equity (Re) based on the CAPM? 2. What is the cost of preferred stock? 3. What is the pre-tax cost of bond? 4. What is market value of common stocks? 5. What is market value of preferred stocks? 6. What is market value of bonds? 7. What is total market value of the firm? 8. What are capital structure weights (We, Wp, and Wd)? 9. What is the weighted average-cost of capital (WACC) of the company
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