Assume the market value of Ford's equity, preferred stock and debt are $8 billion, $3 billion and $15 billion respectively. Ford has a beta of 1.1, the market risk premium is 7% and the risk-free rate of interest is 3%. Ford's preferred stock pays a dividend of $4 each year and trades at a price of $26 per share. Ford's debt trades with a yield to maturity of 8%. What is Ford's weighted average cost of capital if its tax rate is 25%? OA. 8.5% OB. 7.65% C. 8.08% OD. 7.23%

Assume the market value of Ford's equity, preferred stock and debt are $8 billion, $3 billion and $15 billion respectively. Ford has a beta of 1.1, the market risk premium is 7% and the risk-free rate of interest is 3%. Ford's preferred stock pays a dividend of $4 each year and trades at a price of $26 per share. Ford's debt trades with a yield to maturity of 8%. What is Ford's weighted average cost of capital if its tax rate is 25%? OA. 8.5% OB. 7.65% C. 8.08% OD. 7.23%

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Description: Assume the market value of Ford's equity, preferred stock and debt are $8 billion, $3 billion and $15 billion respectively.Ford has a beta of 1.1, the market risk premium is 7% and the risk-free rate of interest is 3%. Ford's preferred stockpays a d

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter12: The Cost Of Capital

Section: Chapter Questions

Problem 19P

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