Badger Corp. has an issue of 6% bonds outstanding with 6 months left to maturity. The bonds are currently priced at $992.61, and pay interest semiannually. The firm's marginal tax rate is 40%. The estimated risk premium between the company's stock and bond returns is 5%. The firm's expects to maintain a capital structure with 40% debt and 60% equity going forward. The company's W.A.C.C. is %. Round your final answer to 2 decimal places (example: enter 12.34 for 12.34%), but do not round any intermediate work in the process. Margin of error for correct responses: +/- .10 (%).
Badger Corp. has an issue of 6% bonds outstanding with 6 months left to maturity. The bonds are currently priced at $992.61, and pay interest semiannually. The firm's marginal tax rate is 40%. The estimated risk premium between the company's stock and bond returns is 5%. The firm's expects to maintain a capital structure with 40% debt and 60% equity going forward. The company's W.A.C.C. is %. Round your final answer to 2 decimal places (example: enter 12.34 for 12.34%), but do not round any intermediate work in the process. Margin of error for correct responses: +/- .10 (%).
Chapter1: Financial Statements And Business Decisions
Section: Chapter Questions
Problem 1Q
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1
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Answer
Badger Corp. has an issue of 6% bonds outstanding with 6 months left to
maturity. The bonds are currently priced at $992.61, and pay interest
semiannually. The firm's marginal tax rate is 40%. The estimated risk
premium between the company's stock and bond returns is 5%. The firm's
expects to maintain a capital structure with 40% debt and 60% equity
going forward. The company's W.A.C.C. is_______%.
Round your final answer to 2 decimal places (example: enter 12.34 for
12.34%), but do not round any intermediate work in the process.
Margin of error for correct responses: +/-.10 (%).
7.8
9.33 margin of error +/-0.1
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