Cullumber Industries has 8 percent coupon bonds outstanding. These bonds have a market price of $954.41, pay interest semiannually, and will mature in six years. The tax rate is 35 percent. The common stock of Cullumber Industries has a beta of 1.6 and the market risk-free rate is 4 percent and the expected return on the market is 9 percent. In addition to common stock, Cullumber has 500,000 preferred shares outstanding that pay a quarterly dividend of $0.40 per share and are currently trading for $20.00 a share. The company's outstanding bonds have a face value of $249,368,720. There are 2.5 million shares of common stock outstanding with a current market price of $98.00 per share. Compute the WACC for Cullumber Industries. (Round intermediate calculation to 4 decimal places, e.g. 15.1253 and round final answer to 2 decimal places, eg. 15.25%)
Cullumber Industries has 8 percent coupon bonds outstanding. These bonds have a market price of $954.41, pay interest semiannually, and will mature in six years. The tax rate is 35 percent. The common stock of Cullumber Industries has a beta of 1.6 and the market risk-free rate is 4 percent and the expected return on the market is 9 percent. In addition to common stock, Cullumber has 500,000 preferred shares outstanding that pay a quarterly dividend of $0.40 per share and are currently trading for $20.00 a share. The company's outstanding bonds have a face value of $249,368,720. There are 2.5 million shares of common stock outstanding with a current market price of $98.00 per share. Compute the WACC for Cullumber Industries. (Round intermediate calculation to 4 decimal places, e.g. 15.1253 and round final answer to 2 decimal places, eg. 15.25%)
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:Cullumber Industries has 8 percent coupon bonds outstanding. These bonds have a market price of $954.41, pay interest
semiannually, and will mature in six years. The tax rate is 35 percent. The common stock of Cullumber Industries has a beta of 1.6 and
the market risk-free rate is 4 percent and the expected return on the market is 9 percent.
In addition to common stock, Cullumber has 500,000 preferred shares outstanding that pay a quarterly dividend of $0.40 per share
and are currently trading for $20.00 a share. The company's outstanding bonds have a face value of $249,368,720. There are 2.5
million shares of common stock outstanding with a current market price of $98.00 per share.
Compute the WACC for Cullumber Industries. (Round intermediate calculation to 4 decimal places, e.g. 15.1253 and round final answer to
2 decimal places, eg. 15.25%)
WACC
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