Caspian Sea Drinks' is financed with 65.00% equity and the remainder in debt. They have 10.00-year, semi-annual pay, 5.38% coupon bonds which sell for 98.57% of par. Their stock currently has a market value of $25.66 and Mr. Bensen believes the market estimates that dividends will grow at 3.23% forever. Next year's dividend is projected to be $2.43. Assuming a marginal tax rate of 29.00 %, what is their WACC (weighted average cost of capital)? Submit Answer format: Percentage Round to: 2 decimal places (Example: 9.24%, % sign required. Will accept decimal format rounded to 4 decimal places (ex: 0.0924))
Caspian Sea Drinks' is financed with 65.00% equity and the remainder in debt. They have 10.00-year, semi-annual pay, 5.38% coupon bonds which sell for 98.57% of par. Their stock currently has a market value of $25.66 and Mr. Bensen believes the market estimates that dividends will grow at 3.23% forever. Next year's dividend is projected to be $2.43. Assuming a marginal tax rate of 29.00 %, what is their WACC (weighted average cost of capital)? Submit Answer format: Percentage Round to: 2 decimal places (Example: 9.24%, % sign required. Will accept decimal format rounded to 4 decimal places (ex: 0.0924))
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:Caspian Sea Drinks' is financed with 65.00% equity and the remainder in debt. They have 10.00-year, semi-annual pay,
5.38% coupon bonds which sell for 98.57% of par. Their stock currently has a market value of $25.66 and Mr. Bensen
believes the market estimates that dividends will grow at 3.23% forever. Next year's dividend is projected to be $2.43.
Assuming a marginal tax rate of 29.00 %, what is their WACC (weighted average cost of capital)?
Submit
Answer format: Percentage Round to: 2 decimal places (Example: 9.24%, % sign required. Will accept decimal format
rounded to 4 decimal places (ex: 0.0924))
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