Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Given the following information, find the WACC for Spencer's Book Shop.
preferred; 60% common equity
Target capital structure
Market value per share, common.
$25.00
Market value per share, preferred.
$20.00
Last annual dividend (Do), common
$2.50
Annual Dividend preferred.
$2.00
Dividend growth rate (g)
5%
Marginal tax rate
40%
Yield to maturity on outstanding bonds
9%
30% debt;
For this problem, assume that floatation costs for common, preferred, and debt are all zero.
O 11.50%
O 11.62%
O 11.92%
O 12.95%
e, 13.00%
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Transcribed Image Text:Given the following information, find the WACC for Spencer's Book Shop. preferred; 60% common equity Target capital structure Market value per share, common. $25.00 Market value per share, preferred. $20.00 Last annual dividend (Do), common $2.50 Annual Dividend preferred. $2.00 Dividend growth rate (g) 5% Marginal tax rate 40% Yield to maturity on outstanding bonds 9% 30% debt; For this problem, assume that floatation costs for common, preferred, and debt are all zero. O 11.50% O 11.62% O 11.92% O 12.95% e, 13.00%
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