Kenny Electric Company's bonds were issued several years ago and now have 20 years to maturity. These bonds have a 15% YTM and sells at a price of $1,075. Company’s cost of common equity is 15% and cost of preferred equity is 12%. Currently company is financed with 20% debt, 50% common equity and 30% preferred equity. Tax rate is 40%. Calculate WACC?
Debenture Valuation
A debenture is a private and long-term debt instrument issued by financial, non-financial institutions, governments, or corporations. A debenture is classified as a type of bond, where the instrument carries a fixed rate of interest, commonly known as the ‘coupon rate.’ Debentures are documented in an indenture, clearly specifying the type of debenture, the rate and method of interest computation, and maturity date.
Note Valuation
It is the process to determine the value or worth of an asset, liability, debt of the company. It can be determined by many processes or techniques. Many factors can impact the valuation of an asset, liability, or the company, like:
Kenny Electric Company's bonds were issued several years ago and now have 20 years to maturity. These bonds have a 15% YTM and sells at a price of $1,075. Company’s
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