Wilson Corporation (not real) has a targeted capital structure of 40 long term debt and 60 common stock The debt is yielding 6 and the corporate tax rate is 35 The common stock is trading at $50 per share and next year 's dividend is $2 50 per share that is growing by 4 per year 1 Calculate the com...

1 Without preferred stock Cost of Equity Dividend in one yearCurrent ...

Wilson Corporation (not real) has a targeted capital structure of 40% long term debt and 60% common

Question:

Wilson (not real) has a targeted of 40% long term debt and 60% common stock. The debt is yielding 6% and the corporate tax rate is 35%. The is trading at $50 per share and next year's is $2.50 per share that is growing by 4% per year.
1. Calculate the company's weighted average cost of capital. Use the discount model.
2. The company's CEO has stated if the company increases the amount of long term debt so the will be 60% debt and 40% equity, this will lower its WACC. Explain and defend why you agree or disagree. Report how you would advise the CEO.
Common Stock
Common stock is an equity component that represents the worth of stock owned by the shareholders of the company. The common stock represents the par value of the shares outstanding at a balance sheet date. Public companies can trade their stocks on... Capital Structure
Capital structure refers to a company’s outstanding debt and equity. The capital structure is the particular combination of debt and equity used by a finance its overall operations and growth. Capital structure maximizes the market value of a... Corporation
A Corporation is a legal form of business that is separate from its owner. In other words, a corporation is a business or organization formed by a group of people, and its right and liabilities separate from those of the individuals involved. It may... Dividend
A dividend is a distribution of a portion of company’s earnings, decided and managed by the company’s board of directors, and paid to the shareholders. Dividends are given on the shares. It is a token reward paid to the shareholders for their...