You are given the following information on Parrothead Enterprises: Debt: Common stock: Preferred stock: Market: 9,600 7.1 percent coupon bonds outstanding, with 24 years to maturity and a quoted price of 105.5. These bonds pay interest semiannually and have a par value of $1,000. 255,000 shares of common stock selling for $65.10 per share. The stock has a beta of .96 and will pay a dividend of $3.30 next year. The dividend is expected to grow by 5.1 percent per year indefinitely. 8,600 shares of 4.55 percent preferred stock selling at $94.60 per share. The par value is $100 per share. 11.4 percent expected return, risk-free rate of 3.9 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 p WACC %
You are given the following information on Parrothead Enterprises: Debt: Common stock: Preferred stock: Market: 9,600 7.1 percent coupon bonds outstanding, with 24 years to maturity and a quoted price of 105.5. These bonds pay interest semiannually and have a par value of $1,000. 255,000 shares of common stock selling for $65.10 per share. The stock has a beta of .96 and will pay a dividend of $3.30 next year. The dividend is expected to grow by 5.1 percent per year indefinitely. 8,600 shares of 4.55 percent preferred stock selling at $94.60 per share. The par value is $100 per share. 11.4 percent expected return, risk-free rate of 3.9 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 p WACC %
Chapter20: Financing With Derivatives
Section: Chapter Questions
Problem 14P
Related questions
Question
Bhupatbhai
![You are given the following information on Parrothead Enterprises:
Debt:
Common stock:
Preferred stock:
Market:
9,600 7.1 percent coupon bonds outstanding, with 24 years to maturity and a
quoted price of 105.5. These bonds pay interest semiannually and have a par
value of $1,000.
255,000 shares of common stock selling for $65.10 per share. The stock has a
beta of .96 and will pay a dividend of $3.30 next year. The dividend is
expected to grow by 5.1 percent per year indefinitely.
8,600 shares of 4.55 percent preferred stock selling at $94.60 per share. The
par value is $100 per share.
11.4 percent expected return, risk-free rate of 3.9 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 p
WACC
%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F8771d05f-3c45-48be-8d0e-809c2e60f545%2F6ced3318-083c-4960-bdb4-e9f6116f53c1%2F3w9tt67_processed.jpeg&w=3840&q=75)
Transcribed Image Text:You are given the following information on Parrothead Enterprises:
Debt:
Common stock:
Preferred stock:
Market:
9,600 7.1 percent coupon bonds outstanding, with 24 years to maturity and a
quoted price of 105.5. These bonds pay interest semiannually and have a par
value of $1,000.
255,000 shares of common stock selling for $65.10 per share. The stock has a
beta of .96 and will pay a dividend of $3.30 next year. The dividend is
expected to grow by 5.1 percent per year indefinitely.
8,600 shares of 4.55 percent preferred stock selling at $94.60 per share. The
par value is $100 per share.
11.4 percent expected return, risk-free rate of 3.9 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 p
WACC
%
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