Given the following, find the WACC assuming the tax rate is 30%. Debt: 3,500 bonds outstanding with 7.20% p.a. coupons paid semi-annually, $1000 face value, 25 years to maturity, current market yield is 5.72% p.a. Ordinary shares: 175,000 shares outstanding selling for $37 per share with beta of 1.15. Preference shares: pay a dividend of 8% p.a. forever on a $15 face value, 45,000 outstanding, currently selling for $14.20 per share. Other information: Market risk premium = 7%, risk-free rate = 3.1% p.a. Calculate the WACC. Source Market Value Weight Cost of Capital WACC Component

Given the following, find the WACC assuming the tax rate is 30%. Debt: 3,500 bonds outstanding with 7.20% p.a. coupons paid semi-annually, $1000 face value, 25 years to maturity, current market yield is 5.72% p.a. Ordinary shares: 175,000 shares outstanding selling for $37 per share with beta of 1.15. Preference shares: pay a dividend of 8% p.a. forever on a $15 face value, 45,000 outstanding, currently selling for $14.20 per share. Other information: Market risk premium = 7%, risk-free rate = 3.1% p.a. Calculate the WACC. Source Market Value Weight Cost of Capital WACC Component

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter20: Financing With Derivatives

Section: Chapter Questions

Problem 14P

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