Badger Corp. has an issue of 6% bonds outstanding with 6 months left to maturity. The bonds are currently priced at $1,008.11, 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 _____%. Margin of error for correct responses: +/-.10(%) Rounding and Formatting instructions: Do not enter dollar signs, percent signs, commas, X, or any words in your
Badger Corp. has an issue of 6% bonds outstanding with 6 months left to maturity. The bonds are currently priced at $1,008.11, 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 _____%. Margin of error for correct responses: +/-.10(%) Rounding and Formatting instructions: Do not enter dollar signs, percent signs, commas, X, or any words in your
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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Transcribed Image Text:Badger Corp. has an issue of 6% bonds outstanding with 6 months left to maturity.
The bonds are currently priced at $1,008.11, 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 %.
Margin of error for correct responses: +/-.10(%)
Rounding and Formatting instructions:
Do not enter dollar signs, percent signs, commas, X, or any words in your
response. Do not round any intermediate work, but round your "final response to 2
decimal places (example: if your answer is 12.3456, 12.3456%, or $12.3456, you
should enter 12.35).
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