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Unbelievable Deals Inc. has the following capital structure and marginal tax rate of 35%. What is its WACC? Debt: 100,000 coupon bonds Eight-year maturity Face value of $1,000 Semi-annual coupon rate of 9% Bond price of $1,075 Common shares: Risk-free rate = 5% Expected market risk premium = 7% Beta = 1.2 Number of common shares = 3,000,000 Common share price = $30 Preferred shares: Par value = $150 Dividends = $12 Share price = $95 Number of preferred shares = 100,000 Select one: a. 7.14% b. 8.80% c. 9.01% d. 10.39% e. 11.56%

Unbelievable Deals Inc. has the following capital structure and marginal tax rate of 35%. What is its WACC? Debt: 100,000 coupon bonds Eight-year maturity Face value of $1,000 Semi-annual coupon rate of 9% Bond price of $1,075 Common shares: Risk-free rate = 5% Expected market risk premium = 7% Beta = 1.2 Number of common shares = 3,000,000 Common share price = $30 Preferred shares: Par value = $150 Dividends = $12 Share price = $95 Number of preferred shares = 100,000 Select one: a. 7.14% b. 8.80% c. 9.01% d. 10.39% e. 11.56%

Essentials Of Investments
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
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12-5

Unbelievable Deals Inc. has the following capital structure and marginal tax rate of 35%. What is its WACC?

Debt:

  • 100,000 coupon bonds
  • Eight-year maturity
  • Face value of $1,000
  • Semi-annual coupon rate of 9%
  • Bond price of $1,075

Common shares:

  • Risk-free rate = 5%
  • Expected market risk premium = 7%
  • Beta = 1.2
  • Number of common shares = 3,000,000
  • Common share price = $30

Preferred shares:

  • Par value = $150
  • Dividends = $12
  • Share price = $95
  • Number of preferred shares = 100,000
Select one:
a. 7.14%
b. 8.80%
c. 9.01%
d. 10.39%
e. 11.56%
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