Western Electric has 35 000 shares of ordinary shares outstanding at a price per share of $47 and a rate of return of 13.5%. The firm has 5 000 preference shares paying 7% dividend outstanding at a price of $58 a share. The preferred share has a par value of $100. The outstanding debt has a total face value of $450 000 and currently sells for 102% of face. The yield-to-maturity on the debt is 8.49%. Required: Calculate the firm's weighted average cost of capital if the tax rate is 30%? Assume a classical tax system.
Western Electric has 35 000 shares of ordinary shares outstanding at a price per share of $47 and a rate of return of 13.5%. The firm has 5 000 preference shares paying 7% dividend outstanding at a price of $58 a share. The preferred share has a par value of $100. The outstanding debt has a total face value of $450 000 and currently sells for 102% of face. The yield-to-maturity on the debt is 8.49%. Required: Calculate the firm's weighted average cost of capital if the tax rate is 30%? Assume a classical tax system.
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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Western Electric has 35 000 shares of ordinary shares outstanding at a price per share of $47 and a
Required: Calculate the firm's weighted average cost of capital if the tax rate is 30%? Assume a classical tax system.
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