Problem 11-10 Spreadsheet Problem: WACC (LG11-3) Johnny Cake Limited has 8 million shares of stock outstanding selling at $18 per share and an issue of $40 million in 8 percent annual coupon bonds with a maturity of 17 years, selling at 92.0 percent of par. Assume Johnny Cake's weighted-average tax rate is 21 percent, it cannot make use of interest tax shields for the foreseeable future, its next dividend is expected to be $3 per share, and all future dividends are expected to grow at 4 percent per year, indefinitely. What is its WACC? Note: Do not round intermediate calculations. Round your final answer to 2 decimal places. WACC

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Problem 11-10 Spreadsheet Problem: WACC (LG11-3)
Johnny Cake Limited has 8 million shares of stock outstanding selling at $18 per share and an issue of $40 million in 8 percent annual
coupon bonds with a maturity of 17 years, selling at 92.0 percent of par. Assume Johnny Cake's weighted-average tax rate is 21
percent, it cannot make use of interest tax shields for the foreseeable future, its next dividend is expected to be $3 per share, and all
future dividends are expected to grow at 4 percent per year, indefinitely.
What is its WACC?
Note: Do not round intermediate calculations. Round your final answer to 2 decimal places.
WACC
Transcribed Image Text:Problem 11-10 Spreadsheet Problem: WACC (LG11-3) Johnny Cake Limited has 8 million shares of stock outstanding selling at $18 per share and an issue of $40 million in 8 percent annual coupon bonds with a maturity of 17 years, selling at 92.0 percent of par. Assume Johnny Cake's weighted-average tax rate is 21 percent, it cannot make use of interest tax shields for the foreseeable future, its next dividend is expected to be $3 per share, and all future dividends are expected to grow at 4 percent per year, indefinitely. What is its WACC? Note: Do not round intermediate calculations. Round your final answer to 2 decimal places. WACC
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