You are given the following information on Parrothead Enterprises: Debt: Common stock: Preferred stock: Market: 8,600 7.2 percent coupon bonds outstanding, with 23 years to maturity and a quoted price of 107. These bonds pay interest semiannually and have a par value of $2,000. WACC 285,000 shares of common stock selling for $65.70 per share. The stock has a beta of 1.02 and will pay a dividend of $3.90 next year. The dividend is expected to grow by 5.2 percent per year indefinitely. 9,200 shares of 4.6 percent preferred stock selling at $95.20 per share. The par value is $100 per share. 10.8 percent expected return, risk-free rate of 4.2 percent, and a 22 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 %
You are given the following information on Parrothead Enterprises: Debt: Common stock: Preferred stock: Market: 8,600 7.2 percent coupon bonds outstanding, with 23 years to maturity and a quoted price of 107. These bonds pay interest semiannually and have a par value of $2,000. WACC 285,000 shares of common stock selling for $65.70 per share. The stock has a beta of 1.02 and will pay a dividend of $3.90 next year. The dividend is expected to grow by 5.2 percent per year indefinitely. 9,200 shares of 4.6 percent preferred stock selling at $95.20 per share. The par value is $100 per share. 10.8 percent expected return, risk-free rate of 4.2 percent, and a 22 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 %
Chapter20: Financing With Derivatives
Section: Chapter Questions
Problem 14P
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Question
![You are given the following information on Parrothead Enterprises:
Debt:
Common stock:
Preferred stock:
Market:
8,600 7.2 percent coupon bonds outstanding, with 23 years to maturity and a
quoted price of 107. These bonds pay interest semiannually and have a par
value of $2,000.
WACC
285,000 shares of common stock selling for $65.70 per share. The stock has a
beta of 1.02 and will pay a dividend of $3.90 next year. The dividend is
expected to grow by 5.2 percent per year indefinitely.
9,200 shares of 4.6 percent preferred stock selling at $95.20 per share. The
par value is $100 per share.
10.8 percent expected return, risk-free rate of 4.2 percent, and a 22 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.
%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fb5a7d1b9-5eed-4582-8185-44c0e9c661f5%2F13478c2c-2ff6-4d93-9063-eee3725c8ad3%2F2skgh88_processed.png&w=3840&q=75)
Transcribed Image Text:You are given the following information on Parrothead Enterprises:
Debt:
Common stock:
Preferred stock:
Market:
8,600 7.2 percent coupon bonds outstanding, with 23 years to maturity and a
quoted price of 107. These bonds pay interest semiannually and have a par
value of $2,000.
WACC
285,000 shares of common stock selling for $65.70 per share. The stock has a
beta of 1.02 and will pay a dividend of $3.90 next year. The dividend is
expected to grow by 5.2 percent per year indefinitely.
9,200 shares of 4.6 percent preferred stock selling at $95.20 per share. The
par value is $100 per share.
10.8 percent expected return, risk-free rate of 4.2 percent, and a 22 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.
%
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