The Finance Manager, in implementing the strategic management of the company, is required to determine Lang Industrial Systems Inc.'s actual Weighted Average Cost of Capital (WACC). Debt: The company has 55,000 bonds outstanding with a face value of $1,000 per bond. The bonds carry an 8% coupon, pay interest annually, and mature in 15 years. The bonds are selling at 125% of face value. Common Stock: 15,000,000 shares outstanding with a market price per share of $18.50. The company intends to pay a dividend of $1.50 next year; dividends are expected to grow by 2% annually. Preference Shares: 2,500,000 shares of preferred stock at a price of $40 per share and an annual dividend of $3 per share. Additional Information: The Company's Tax rate is 30%. Required: Calculate the Weighted Average Cost of Capital for Lang Industrial Systems Inc
The Finance Manager, in implementing the strategic management of the company, is required to determine Lang Industrial Systems Inc.'s actual Weighted Average Cost of Capital (WACC). Debt: The company has 55,000 bonds outstanding with a face value of $1,000 per bond. The bonds carry an 8% coupon, pay interest annually, and mature in 15 years. The bonds are selling at 125% of face value. Common Stock: 15,000,000 shares outstanding with a market price per share of $18.50. The company intends to pay a dividend of $1.50 next year; dividends are expected to grow by 2% annually. Preference Shares: 2,500,000 shares of preferred stock at a price of $40 per share and an annual dividend of $3 per share. Additional Information: The Company's Tax rate is 30%. Required: Calculate the Weighted Average Cost of Capital for Lang Industrial Systems Inc
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
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