Sonic Masters maintains a debt-equity ratio of 0.65 and has a tax rate of thirty-two percent. The firm does not issue preferred stock. The pre-tax cost of debt is 9.8%. There are 25,000 shares of stock outstanding with a beta of 1.2 and a market price of nineteen pesos a share. The current market risk premium is 8.5 percent and the current risk-free rate is 3.6 percent. This year, the firm paid an annual dividend of P1.10 a share and expects to increase that amount by 2 percent each year. What is the firm's WACC?
Sonic Masters maintains a debt-equity ratio of 0.65 and has a tax rate of thirty-two percent. The firm does not issue preferred stock. The pre-tax cost of debt is 9.8%. There are 25,000 shares of stock outstanding with a beta of 1.2 and a market price of nineteen pesos a share. The current market risk premium is 8.5 percent and the current risk-free rate is 3.6 percent. This year, the firm paid an annual dividend of P1.10 a share and expects to increase that amount by 2 percent each year. What is the firm's 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
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Transcribed Image Text:Sonic Masters maintains a debt-equity ratio of 0.65 and has a tax rate of thirty-two percent. The firm does not
issue preferred stock. The pre-tax cost of debt is 9.8%. There are 25,000 shares of stock outstanding with a beta of
1.2 and a market price of nineteen pesos a share. The current market risk premium is 8.5 percent and the current
risk-free rate is 3.6 percent. This year, the firm paid an annual dividend of P1.10 a share and expects to increase
that amount by 2 percent each year.
What is the firm's WACC?
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