You have been assigned to calculate the weighted average cost of capital (WACC) of XYZ Corporation. The target capital structure of xyz is %40 debt and the remaining is common equity. Xyz’s bonds have a yield of %12,35. The Corporation paid dividend of $3.25 and the future dividends are expected to
You have been assigned to calculate the weighted average cost of capital (WACC) of XYZ Corporation. The target capital structure of xyz is %40 debt and the remaining is common equity. Xyz’s bonds have a yield of %12,35. The Corporation paid dividend of $3.25 and the future dividends are expected to
Chapter12: The Cost Of Capital
Section: Chapter Questions
Problem 17P
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You have been assigned to calculate the weighted average cost of capital (WACC) of XYZ Corporation. The target capital structure of xyz is %40 debt and the remaining is common equity. Xyz’s bonds have a yield of %12,35. The Corporation paid dividend of $3.25 and the future dividends are expected to grow at a constant rate of %4. The current market price per share of common stock is $22.15. The flotation costs are %6 of price per share. The tax bracket is %40. Calculate the wacc when the Corporation is to finance its investments through a new stock issue.
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You have been assigned to calculate the weighted average cost of capital (WACC) of XYZ corporation. The target capital structure of XYZ is 40.00% debt and the remaining is
common equity. XYZ's bonds have a yield of 12.35%. The corporation paid dividend of $3.25 and the future dividends are expected to grow at a constant rate of 4.00%. The
current market price per share of common stock is $22.15. The flotation costs are 6.00% of price per share. The tax bracket is 40.00%. Calculate the WACC when the
corporation is to finance its investments through a new stock issue.
Your Answer:
(Round to TWO decimals.)
The WACC is:
96.](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2Fbd400c9f-0d02-4aef-b3f4-bdc0eda9bc2a%2F61381e7b-f5da-4394-8eeb-6a174a9c002d%2Fsp9kbf5_processed.jpeg&w=3840&q=75)
Transcribed Image Text:Click to see additional instructions
You have been assigned to calculate the weighted average cost of capital (WACC) of XYZ corporation. The target capital structure of XYZ is 40.00% debt and the remaining is
common equity. XYZ's bonds have a yield of 12.35%. The corporation paid dividend of $3.25 and the future dividends are expected to grow at a constant rate of 4.00%. The
current market price per share of common stock is $22.15. The flotation costs are 6.00% of price per share. The tax bracket is 40.00%. Calculate the WACC when the
corporation is to finance its investments through a new stock issue.
Your Answer:
(Round to TWO decimals.)
The WACC is:
96.
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