You are given the following information concerning Parrothead Enterprises: Debt: 9,200 6.4 percent coupon bonds outstanding, with 23 years to maturity and a quoted price of 104.50. These bonds have a par value of $1,000 and pay interest semiannually. Common stock: 235,000 shares of common stock selling for $64.70 per share. The stock has a beta of .92 and will pay a dividend of $2.90 next year. The dividend is expected to grow by 5.2 percent per year indefinitely. Preferred stock: 8,200 shares of 4.60 percent preferred stock selling at $94.20 per share. Market: 11.8 percent expected return, a risk-free rate of 3.70 percent, and a 22 percent tax rate. What is the firm's cost of each form of financing? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) Aftertax cost of debt Cost of preferred stock Cost of equity % % % Calculate the WACC for the company. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) WACC %

You are given the following information concerning Parrothead Enterprises: Debt: 9,200 6.4 percent coupon bonds outstanding, with 23 years to maturity and a quoted price of 104.50. These bonds have a par value of $1,000 and pay interest semiannually. Common stock: 235,000 shares of common stock selling for $64.70 per share. The stock has a beta of .92 and will pay a dividend of $2.90 next year. The dividend is expected to grow by 5.2 percent per year indefinitely. Preferred stock: 8,200 shares of 4.60 percent preferred stock selling at $94.20 per share. Market: 11.8 percent expected return, a risk-free rate of 3.70 percent, and a 22 percent tax rate. What is the firm's cost of each form of financing? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) Aftertax cost of debt Cost of preferred stock Cost of equity % % % Calculate the WACC for the company. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) WACC %

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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You are given the following information on Parrothead Enterprises: Debt: 8,500 7.1 percent coupon bonds outstanding, with 24 years to maturity and a quoted price of 106.75. These bonds pay interest semiannually and have a par value of $2,000. Common stock: 280,000 shares of common stock selling for $65.60 per share. The stock has a beta of 1.06 and will pay a dividend of $3.80 next year. The dividend is expected to grow by 5.1 percent per year indefinitely. Preferred stock: 9,100 shares of 4.55 percent preferred stock selling at $95.10 per share. The par value is $100 per share. Market: 10.9 percent expected return, risk-free rate of 4.15 percent, and a 21 percent tax rate. Calculate the company's WACC.
You are given the following information on Parrothead Enterprises: Debt: 9,300 6.5 percent coupon bonds outstanding, with 22 years to maturity and a quoted price of 104.75. These bonds pay interest semiannually and have a par value of $1,000. Common stock: 240,000 shares of common stock selling for $64.80 per share. The stock has a beta of .93 and will pay a dividend of $3.00 next year. The dividend is expected to grow by 5.3 percent per year indefinitely. Preferred stock: 8,300 shares of 4.65 percent preferred stock selling at $94.30 per share. The par value is $100 per share. Market: 11.7 percent expected return, risk-free rate of 3.75 percent, and a 23 percent tax rate. Calculate the company's WACC. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) WACC %
You are given the following information on Parrothead Enterprises: Debt: 9,400 6.6 percent coupon bonds outstanding, with 21 years to maturity and a quoted price of 105. These bonds pay interest semiannually and have a par value of $1,000. Common stock: 245,000 shares of common stock selling for $64.90 per share. The stock has a beta of .94 and will pay a dividend of $3.10 next year. The dividend is expected to grow by 5.4 percent per year indefinitely. Preferred stock: 8,400 shares of 4.7 percent preferred stock selling at $94.40 per share. The par value is $100 per share. Market: 11.6 percent expected return, risk-free rate of 3.8 percent, and a 24 percent tax rate. Calculate the company's WACC. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.
You are given the following information concerning Parrothead Enterprises: Debt: 9,300 6.5 percent coupon bonds outstanding, with 22 years to maturity and a quoted price of 104.75. These bonds have a par value of $1,000 and pay interest semiannually. Common stock: 240,000 shares of common stock selling for $64.80 per share. The stock has a beta of .93 and will pay a dividend of $3.00 next year. The dividend is expected to grow by 5.3 percent per year indefinitely. Preferred stock: 8,300 shares of 4.65 percent preferred stock selling at $94.30 per share. Market: 11.7 percent expected return, a risk-free rate of 3.75 percent, and a 23 percent tax rate. What is the firm's cost of each form of financing? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.)
You are given the following information on Parrothead Enterprises: Debt: 9,500 7 percent coupon bonds outstanding, with 25 years to maturity and a quoted price of 105.25. These bonds pay interest semiannually and have a par value of $1,000. Common stock: 250,000 shares of common stock selling for $65.00 per share. The stock has a beta of .95 and will pay a dividend of $3.20 next year. The dividend is expected to grow by 5 percent per year indefinitely. Preferred stock: 8,500 shares of 4.5 percent preferred stock selling at $94.50 per share. The par value is $100 per share. Market: , 11.5 percent expected return, risk - free rate of 3.85 percent, and a 25 percent tax rate. Calculate the company's WACC. Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g ., 32.16. WACC % You are given the following information on Parrothead Enterprises: Debt: Common stock: 9,500 7 percent coupon bonds outstanding, with 25 years to maturity and…
You are given the following information on Parrothead Enterprises: Debt: Common stock: Preferred stock: 9,600 7.1 percent coupon bonds outstanding, with 24 years to maturity and a quoted price of 105.5 . These bonds pay interest semiannually and have a par value of $1,000. 255,000 shares of common stock selling for $65.10 per share. The stock has a beta of .96 and will pay a dividend of $3.30 next year. The dividend is expected to grow by 5.1 percent per year indefinitely. Market: 8,600 shares of 4.55 percent preferred stock selling at $94.60 per share. The par value is $100 per share. 11.4 percent expected return, risk-free rate of 3.9 percent, and a 21 percent tax rate. Calculate the company's WACC. Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal
You are given the following information on Parrothead Enterprises: Debt: Common stock: Preferred stock: Market: 8,600 7.2 percent coupon bonds outstanding, with 23 years to maturity and a quoted price of 107. These bonds pay interest semiannually and have a par value of $2,000. WACC 285,000 shares of common stock selling for $65.70 per share. The stock has a beta of 1.02 and will pay a dividend of $3.90 next year. The dividend is expected to grow by 5.2 percent per year indefinitely. 9,200 shares of 4.6 percent preferred stock selling at $95.20 per share. The par value is $100 per share. 10.8 percent expected return, risk-free rate of 4.2 percent, and a 22 percent tax rate. Calculate the company's WACC. Note: Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16. %
You have the following information about a company:Debt: 5,000 3% bonds with twelve years to maturity. The face value of the bond is $1000. The bonds currently sell for $1190 and the bonds make semi-annual paymentsEquity: 125,000 shares outstanding selling for $65 per share. The beta is 1.35. The last dividend paid was $3.25.Market: There is a 5% market risk premium. The risk free rate is 2%. The corporate tax rate is 25%Given the above information, calculate the firm’s WACC.
You are given the following information for Tara Ita Power Co. Assume the company’s tax rate is 22 percent. Debt: 5,000 6.6 percent coupon bonds outstanding, $1,000 par value, 20 years to maturity, selling for 109 percent of par; the bonds make semiannual payments. Common stock: 380,000 shares outstanding, selling for $56 per share; the beta is 1.12. Market: 5 percent market risk premium and 4.6 percent risk-free rate. What is the company's WACC? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
You are given the following information concerning Parrothead Enterprises: Debt: Common stock: 285,000 shares of common stock selling for $65.70 per share. The stock has a beta of .97 and will pay a dividend of $3.90 next year. The dividend is expected to grow by 5.2 percent per year indefinitely. Preferred stock: 9,200 shares of 4.60 percent preferred stock selling at $95.20 per share. Market: 10,200 7.2 percent coupon bonds outstanding, with 23 years to maturity and a quoted price of 107.00. These bonds pay interest semiannually. An expected return of 10.8 percent, a risk-free rate of 5.10 percent, and a 30 percent tax rate. Show Transcribed Text What is the firm's cost of each form of financing? (Do not round intermediate calculations and enter your answers as a percent rounded to 2 decimal places, e.g., 32.16.) Aftertax cost of debt Cost of preferred stock Cost of equity WACC % Calculate the WACC for the company. (Do not round intermediate calculations and enter your answer as a…
You are given the following information for Lightning Power Co. Assume the company's tax rate is 22%. Debt: 12000, 6.1% coupon bonds outstanding, $1,000 par value, 27 years to maturity, selling for 109% of par. The bonds make semiannual payments. Common stock: 450,000 shares outstanding selling for $63 per share. The beta is 1.14 Preferred stock: 19,500 shares of 3.9% preferred stock outstanding, currently selling for $84 per share. The Par value is $100 per share. Market: 5% market risk premium and 4.9% risk free rate. What is the company's WACC?
You are given the following Information for Lighting Power Company. Assume the company's tax rate is 22 percent. 17,000 6.6 percent coupon bonds outstanding, $1,000 par value, 26 years to maturity, selling for 106 percent of par; the bonds make semiannual payments. Debt: Common 500,000 shares outstanding, selling for $68 per share; the beta is 1.19. stock: 22,000 shares of 4.4 percent preferred stock outstanding, a $100 par value, currently selling for $89 per share. Preferred stock: Market: 7 percent market risk premlum and 5.5 percent risk-free rate. What is the company's WACC? (Do not round Intermedlate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) WACC

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