Calculate the company's WACC.

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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overall cost öf
17. Calculating the WACC You are given the following information concerning
Parrothead Enterprises:
LO 3
13,000 6.4 percent coupon bonds outstanding, with 15
years to maturity and a quoted price of 107. These
bonds pay interest semiannually.
345,000 shares of common stock selling for $76.50
per share. The stock has a beta of .90 and will pay a
dividend of $3.80 next year. The dividend is expected
to grow by 5 percent per year indefinitely.
10,000 shares of 4.4 percent preferred stock selling at
$86 per share.
Debt:
Common stock:
Preferred stock:
Market:
11 percent expected return, risk-free rate of 3.6
percent, and a 22 percent tax rate.
Calculate the company's WACC.
A 99 Inductrial Machines sssed
Transcribed Image Text:overall cost öf 17. Calculating the WACC You are given the following information concerning Parrothead Enterprises: LO 3 13,000 6.4 percent coupon bonds outstanding, with 15 years to maturity and a quoted price of 107. These bonds pay interest semiannually. 345,000 shares of common stock selling for $76.50 per share. The stock has a beta of .90 and will pay a dividend of $3.80 next year. The dividend is expected to grow by 5 percent per year indefinitely. 10,000 shares of 4.4 percent preferred stock selling at $86 per share. Debt: Common stock: Preferred stock: Market: 11 percent expected return, risk-free rate of 3.6 percent, and a 22 percent tax rate. Calculate the company's WACC. A 99 Inductrial Machines sssed
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