AllCity, Inc., is financed 42% with debt, 5% with preferred stock, and 53% with common stock. Its pretax cost of debt is 5.7%, its preferred stock pays an annual dividend of $2.51 and is priced at $27. It has an equity beta of 1.11. Assume the risk-free rate is 2.2%, the market risk premium is 7.3% and AlICity's tax rate is 25%. What is its after-tax WACC? Note: Assume that the firm will always be able to utilize its full interest tax shield. The WACC is __ % ? (Round to two decimal places.)
AllCity, Inc., is financed 42% with debt, 5% with preferred stock, and 53% with common stock. Its pretax cost of debt is 5.7%, its preferred stock pays an annual dividend of $2.51 and is priced at $27. It has an equity beta of 1.11. Assume the risk-free rate is 2.2%, the market risk premium is 7.3% and AlICity's tax rate is 25%. What is its after-tax WACC? Note: Assume that the firm will always be able to utilize its full interest tax shield. The WACC is __ % ? (Round to two decimal places.)
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
Problem 1PS
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AllCity, Inc., is financed 42% with debt, 5% with
Note: Assume that the firm will always be able to utilize its full interest tax shield.
The WACC is __ % ? (Round to two decimal places.)
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