What is the capital structure of this company based on market values? Bond issue #1, maturity 12 years, coupon rate 9%, current YTM 9.75%, book value $10 million Bond issue #2, maturity 16 years, coupon rate 9%, current YTM 7.75%, book value $15 million Preferred stock, 500,000 shares, par $10 per share Common stock, par $1 per share, book value $10 million Market price of preferred stock is $17.50, market price of common stock is $15 What is the WACC if: Tax rate = 40% Preferred stock dividend = $1.50 per share Common stock dividend = $.375 per share Beta is 1.15 RFR = 5.21% Expected return of the market = 14%
What is the capital structure of this company based on market values? Bond issue #1, maturity 12 years, coupon rate 9%, current YTM 9.75%, book value $10 million Bond issue #2, maturity 16 years, coupon rate 9%, current YTM 7.75%, book value $15 million Preferred stock, 500,000 shares, par $10 per share Common stock, par $1 per share, book value $10 million Market price of preferred stock is $17.50, market price of common stock is $15 What is the WACC if: Tax rate = 40% Preferred stock dividend = $1.50 per share Common stock dividend = $.375 per share Beta is 1.15 RFR = 5.21% Expected return of the market = 14%
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
Problem 1PS
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What is the capital structure of this company based on market values?
- Bond issue #1, maturity 12 years, coupon rate 9%, current YTM 9.75%, book value $10 million
- Bond issue #2, maturity 16 years, coupon rate 9%, current YTM 7.75%, book value $15 million
- Preferred stock, 500,000 shares, par $10 per share
- Common stock, par $1 per share, book value $10 million
- Market price of preferred stock is $17.50, market price of common stock is $15
What is the WACC if:
- Tax rate = 40%
- Preferred stock dividend = $1.50 per share
- Common stock dividend = $.375 per share
- Beta is 1.15
- RFR = 5.21%
- Expected return of the market = 14%
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