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4. Feast Foods is interested in calculating its weighted average cost of capital. The company's CFO has collected the following information: The target capital structure consists of 40% debt and 60% common stock ● • • The company has a 20-year noncallable bonds with a par value of P1,000, a 9% annual coupon, and is selling now at 92-1/4. Equity flotation costs are 2% The company's common stock has a beta of 0.80 The risk-free rate is 5%; and market risk premium is 4% The company's tax rate is 40%

4. Feast Foods is interested in calculating its weighted average cost of capital. The company's CFO has collected the following information: The target capital structure consists of 40% debt and 60% common stock ● • • The company has a 20-year noncallable bonds with a par value of P1,000, a 9% annual coupon, and is selling now at 92-1/4. Equity flotation costs are 2% The company's common stock has a beta of 0.80 The risk-free rate is 5%; and market risk premium is 4% The company's tax rate is 40%

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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show solution. calculate the WACC

4. Feast Foods is interested in calculating its weighted average cost of capital. The company's CFO has collected the following information: The target capital structure consists of 40% debt and 60% common stock • The company has a 20-year noncallable bonds with a par value of P1,000, a 9% annual coupon, and is selling now at 92-1/4. • Equity flotation costs are 2% The company's common stock has a beta of 0.80 The risk-free rate is 5%; and market risk premium is 4% The company's tax rate is 40%
Transcribed Image Text:4. Feast Foods is interested in calculating its weighted average cost of capital. The company's CFO has collected the following information: The target capital structure consists of 40% debt and 60% common stock • The company has a 20-year noncallable bonds with a par value of P1,000, a 9% annual coupon, and is selling now at 92-1/4. • Equity flotation costs are 2% The company's common stock has a beta of 0.80 The risk-free rate is 5%; and market risk premium is 4% The company's tax rate is 40%
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