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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%

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
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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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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