Company A wants to calculate its WACC. It has just issued a 6- year, 9% coupon, non-callable bond at par value. A's current stock price is $16 and A just paid s $2.3 per share dividend. A's dividend payment is expected to grow at a constant rate of 4% a year. A wants to keep a debt-to - capital ratio of 20 %. Tax rate is 30%. If A does not have preferred stock and floatation costs, what is its WACC (please report WACC
Company A wants to calculate its WACC. It has just issued a 6- year, 9% coupon, non-callable bond at par value. A's current stock price is $16 and A just paid s $2.3 per share dividend. A's dividend payment is expected to grow at a constant rate of 4% a year. A wants to keep a debt-to - capital ratio of 20 %. Tax rate is 30%. If A does not have preferred stock and floatation costs, what is its WACC (please report 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
Problem 1PS
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Question
![Company A wants to calculate its
WACC. It has just issued a 6-
year, 9% coupon, non-callable
bond at par value. A's current
stock price is $16 and A just paid
s $2.3 per share dividend. A's
dividend payment is expected to
grow at a constant rate of 4% a
year. A wants to keep a debt-to
- capital ratio of 20 %. Tax rate is
30%. If A does not have
preferred stock and floatation
costs, what is its WACC (please
report WACC](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F68be6c8c-ed19-4ee5-9b39-1655baf1000f%2F883d7633-4b97-401f-874a-80bd093a8a01%2Fhtcdd5l_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Company A wants to calculate its
WACC. It has just issued a 6-
year, 9% coupon, non-callable
bond at par value. A's current
stock price is $16 and A just paid
s $2.3 per share dividend. A's
dividend payment is expected to
grow at a constant rate of 4% a
year. A wants to keep a debt-to
- capital ratio of 20 %. Tax rate is
30%. If A does not have
preferred stock and floatation
costs, what is its WACC (please
report WACC
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