Priyo Prangon Group has the following capital structure, which it considers optimal: Mortgage Bonds, ($1000 par) $ 30,000,000 Preferred stock, ($100 par) $ 25,000,000 New Common stock ($40 par) $ 50,000,000 Retained earnings $ 30,000,000 $ 135,000,000 Company issued l,000 tk; 8.5%, 15-year bond whose net proceeds are Tk. 955.The tax rate is 35%. Company has preferred stock that pays a $15 dividend per share and sells for $150 per share in the market. Company’s stock is $165. The dividend to be paid at the end of the coming year is $18 per share and is expected to grow at a constant annual rate of 6% and its flotation cost is 4%. Assume the Government Treasury bill rate (risk free rate) is 7%. The Abul Khair Group stock’s beta coefficient (β) is 1.5 and the rate of return on the market portfolio is 12% calculate the weighted average cost of capital
Priyo Prangon Group has the following capital structure, which it considers optimal:
Mortgage Bonds, ($1000 par) $ 30,000,000
New Common stock ($40 par) $ 50,000,000
$ 135,000,000
Company issued l,000 tk; 8.5%, 15-year bond whose net proceeds are Tk. 955.The tax rate is
35%. Company has preferred stock that pays a $15 dividend per share and sells for $150 per share in
the market. Company’s stock is $165. The dividend to be paid at the end of the coming year is $18
per share and is expected to grow at a constant annual rate of 6% and its flotation cost is 4%. Assume
the Government Treasury bill rate (risk free rate) is 7%. The Abul Khair Group stock’s beta
coefficient (β) is 1.5 and the
calculate the weighted average cost of capital
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