Suppose that your company just paid a dividend of $1.2; the dividends are expected market price/share is $15.50. Suppose also that your company has some bonds outstanding in the market selling for $896.85. The bonds have 12 years left to maturity, with 10% coupon rate with semi-annual payments and $1000 par value. If your company's capital structure is 35% debt and 65% equity, with the tax rate of 40% what is the WACC? 08.15 % 9.92% 6.49 % 9.08% 07.65%

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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Suppose that your company just paid a dividend of $1.2; the dividends are expected to grow at a constant rate of 3.5% indefinitely. Today's
market price/share is $15.50. Suppose also that your company has some bonds outstanding in the market selling for $896.85. The bonds
have 12 years left to maturity, with 10% coupon rate with semi-annual payments and $1000 par value. If your company's capital structure is
35% debt and 65% equity, with the tax rate of 40% what is the WACC?
8.15%
9.92%
6.49%
9.08%
7.65%
Transcribed Image Text:Suppose that your company just paid a dividend of $1.2; the dividends are expected to grow at a constant rate of 3.5% indefinitely. Today's market price/share is $15.50. Suppose also that your company has some bonds outstanding in the market selling for $896.85. The bonds have 12 years left to maturity, with 10% coupon rate with semi-annual payments and $1000 par value. If your company's capital structure is 35% debt and 65% equity, with the tax rate of 40% what is the WACC? 8.15% 9.92% 6.49% 9.08% 7.65%
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