You are looking at the following information: Debt: Common stock: Preferred stock: Market: 5,000 8.5 percent coupon bonds outstanding, $1,000 par value, 21 years to maturity, selling for 103 percent of par; the bonds make semiannual payments. 110,000 shares outstanding, selling for $62 per share; the beta is 1.2. 16,000 shares of 7.5 percent preferred stock (review my Ch.8 slide 43: what does ...% preferred stock" phrase mean?) outstanding, currently selling for $104 per share. 9.5 percent market risk premium and 7.5 percent risk-free rate. The company is in the 33 percent tax rate bracket based on its corporate income. Required: Find the WACC. (Do not round your intermediate calculations.)
You are looking at the following information: Debt: Common stock: Preferred stock: Market: 5,000 8.5 percent coupon bonds outstanding, $1,000 par value, 21 years to maturity, selling for 103 percent of par; the bonds make semiannual payments. 110,000 shares outstanding, selling for $62 per share; the beta is 1.2. 16,000 shares of 7.5 percent preferred stock (review my Ch.8 slide 43: what does ...% preferred stock" phrase mean?) outstanding, currently selling for $104 per share. 9.5 percent market risk premium and 7.5 percent risk-free rate. The company is in the 33 percent tax rate bracket based on its corporate income. Required: Find the WACC. (Do not round your intermediate calculations.)
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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Transcribed Image Text:You are looking at the following information:
Debt:
Common stock:
Preferred stock:
Market:
5,000 8.5 percent coupon bonds outstanding, $1,000 par
value, 21 years to maturity, selling for 103 percent of par; the
bonds make semiannual payments.
110,000 shares outstanding, selling for $62 per share; the
beta is 1.2.
16,000 shares of 7.5 percent preferred stock (review my
Ch.8 slide 43: what does ...% preferred stock" phrase
mean?) outstanding, currently selling for $104 per share.
9.5 percent market risk premium and 7.5 percent risk-free
rate.
The company is in the 33 percent tax rate bracket based on its corporate income.
Required:
Find the WACC. (Do not round your intermediate calculations.)
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