You are given the following information on Parrothead Enterprises: Debt: Common stock: 9,000 7.1 percent coupon bonds outstanding, with 24 years to maturity and a quoted price of 108. These bonds pay interest semiannually and I have a par value of $2,000. 305,000 shares of common stock selling for $66.10 per share. The stock has a beta of 1.06 and will pay a dividend of $4.30 next year. The dividend is expected to grow by 5.1 percent per year indefinitely. Preferred stock: 9,600 shares of 4.55 percent preferred stock selling at $95.60 per share. The par value is $100 per share. Market: 10.4 percent expected return, risk-free rate of 4.4 percent, and a 21 percent tax rate. Calculate the company's WACC. Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. WACC %
You are given the following information on Parrothead Enterprises: Debt: Common stock: 9,000 7.1 percent coupon bonds outstanding, with 24 years to maturity and a quoted price of 108. These bonds pay interest semiannually and I have a par value of $2,000. 305,000 shares of common stock selling for $66.10 per share. The stock has a beta of 1.06 and will pay a dividend of $4.30 next year. The dividend is expected to grow by 5.1 percent per year indefinitely. Preferred stock: 9,600 shares of 4.55 percent preferred stock selling at $95.60 per share. The par value is $100 per share. Market: 10.4 percent expected return, risk-free rate of 4.4 percent, and a 21 percent tax rate. Calculate the company's WACC. Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. WACC %
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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Vijay
Transcribed Image Text:You are given the following information on Parrothead Enterprises:
Debt:
Common stock:
305,000 shares of common stock selling for $66.10 per share. The stock
has a beta of 1.06 and will pay a dividend of $4.30 next year. The
dividend is expected to grow by 5.1 percent per year indefinitely.
Preferred stock: 9,600 shares of 4.55 percent preferred stock selling at $95.60 per
share. The par value is $100 per share.
Market:
10.4 percent expected return, risk-free rate of 4.4 percent, and a 21
percent tax rate.
9,000 7.1 percent coupon bonds outstanding, with 24 years to maturity
and a quoted price of 108. These bonds pay interest semiannually and
have a par value of $2,000.
Calculate the company's WACC.
Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.
WACC
%
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