lorenalena
New member
...Please im going insane!!!? i cannot solve this problem can someone show me how pleaseeeeeeeeee its driving me nuts... the numbers change each time so i get it wrong each time
WACC for a firm: The Imaginary Products Co. currently has $225 million of market value debt outstanding. The 9 percent coupon bonds (semiannual pay) have a maturity of 15 years and are currently priced at $1,194.33 per bond. The firm also has an issue of 2 million preferred shares outstanding with a market price of $28. The preferred shares offer an annual dividend of $1.20. Imaginary also has 14 million shares of common stock outstanding with a price of $20.00 per share. The firm is expected to pay a $2.20 common dividend one year from today, and that dividend is expected to increase by 5 percent per year forever. If Imaginary is subject to a 40 percent marginal tax rate, then what is the firm’s weighted average cost of capital? _________%.
(Omit the percent sign in your answer. Carry out all calculations to four decimal places and round your final answer to two decimal places, for example 7.80%.)
1. Pre-tax cost of debt = %.
(Omit the percent sign in your answer. Carry out all calculations to four decimal places and round your final answer to two decimal places, for example 7.80%.)
2. Cost of common equity = %.
(Omit the percent sign in your answer. Carry out all calculations to four decimal places and round your final answer to two decimal places, for example 7.80%.)
3. Cost of preferred equity = %.
(Omit the percent sign in your answer. Carry out all calculations to four decimal places and round your final answer to two decimal places, for example 7.80%.)
4. Weights for
a) Debt = %
b) Preferred equity = %
c) Common equity = %
(Omit the percent sign in your answer. Carry out all calculations to four decimal places and round your final answer to two decimal places, for example 7.80%.)
5. WACC = %
WACC for a firm: The Imaginary Products Co. currently has $225 million of market value debt outstanding. The 9 percent coupon bonds (semiannual pay) have a maturity of 15 years and are currently priced at $1,194.33 per bond. The firm also has an issue of 2 million preferred shares outstanding with a market price of $28. The preferred shares offer an annual dividend of $1.20. Imaginary also has 14 million shares of common stock outstanding with a price of $20.00 per share. The firm is expected to pay a $2.20 common dividend one year from today, and that dividend is expected to increase by 5 percent per year forever. If Imaginary is subject to a 40 percent marginal tax rate, then what is the firm’s weighted average cost of capital? _________%.
(Omit the percent sign in your answer. Carry out all calculations to four decimal places and round your final answer to two decimal places, for example 7.80%.)
1. Pre-tax cost of debt = %.
(Omit the percent sign in your answer. Carry out all calculations to four decimal places and round your final answer to two decimal places, for example 7.80%.)
2. Cost of common equity = %.
(Omit the percent sign in your answer. Carry out all calculations to four decimal places and round your final answer to two decimal places, for example 7.80%.)
3. Cost of preferred equity = %.
(Omit the percent sign in your answer. Carry out all calculations to four decimal places and round your final answer to two decimal places, for example 7.80%.)
4. Weights for
a) Debt = %
b) Preferred equity = %
c) Common equity = %
(Omit the percent sign in your answer. Carry out all calculations to four decimal places and round your final answer to two decimal places, for example 7.80%.)
5. WACC = %