Company A wants to calculate its WACC. It has just issued a 18-year, 8% coupon, non-callable bond at par value. A's current stock price is $21 and A just paid s $0.6 per share dividend. A's dividend payment is expected to grow at a constant rate of 7% a year. A wants to keep a debt-to-capital ratio of 60%. Tax rate is 25%. If A does not have preferred stock and floatation costs, what is its WACC (please report WACC as a decimal number with four decimal places, such as 0.0562)?
Company A wants to calculate its WACC. It has just issued a 18-year, 8% coupon, non-callable bond at par value. A's current stock price is $21 and A just paid s $0.6 per share dividend. A's dividend payment is expected to grow at a constant rate of 7% a year. A wants to keep a debt-to-capital ratio of 60%. Tax rate is 25%. If A does not have preferred stock and floatation costs, what is its WACC (please report WACC as a decimal number with four decimal places, such as 0.0562)?
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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Company A wants to calculate its WACC. It has just issued a 18-year, 8% coupon, non-callable bond at par value. A's current stock price is $21 and A just paid s $0.6 per share dividend. A's dividend payment is expected to grow at a constant rate of 7% a year. A wants to keep a debt-to-capital ratio of 60%. Tax rate is 25%. If A does not have preferred stock and floatation costs, what is its WACC (please report WACC as a decimal number with four decimal places, such as 0.0562)?
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