Using the following information about Drew Co. Inc. and the market (SPY), what is the Weighted Average Cost of Capital for DCI? Drew Co. Inc DCI Stock Price # shares Outstanding Corporate Tax Rate = Risk-Free Rate 10 yr Zero Coupon Bond 20 Yr (semi-annual,) Bond Coupon Rate of 20yr bond Preferred Shares Pref. Payment Rate Stock Returns Time DCI SPY 1 0.03 0.05 23 0.25 0.18 0.1 0.02 4 0.08 0.06 Par Value Time left 3:53:55 80.80 250,000 40.00% 3.00% Mkt Price (Quoted % of Par) 10,000,000 50.00 10,000,000 70.00 5.00% 10,000,000 131.00 12.00%

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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Using the following information about Drew Co. Inc. and the market (SPY), what is the
Weighted Average Cost of Capital for DCI?
Drew Co. Inc
DCI Stock Price
# shares Outstanding
Corporate Tax Rate =
Risk-Free Rate
10 yr Zero Coupon Bond
20 Yr (semi-annual,) Bond
Coupon Rate of 20yr bond
Preferred Shares
Pref. Payment Rate
Stock Returns
Time
DCI
SPY
1
0.03
0.05
23
0.25
0.18
0.1
0.02
4
0.08
0.06
Par Value
Time left 3:53:55
80.80
250,000
40.00%
3.00%
Mkt Price
(Quoted % of
Par)
10,000,000
50.00
10,000,000
70.00
5.00%
10,000,000
131.00
12.00%
Transcribed Image Text:Using the following information about Drew Co. Inc. and the market (SPY), what is the Weighted Average Cost of Capital for DCI? Drew Co. Inc DCI Stock Price # shares Outstanding Corporate Tax Rate = Risk-Free Rate 10 yr Zero Coupon Bond 20 Yr (semi-annual,) Bond Coupon Rate of 20yr bond Preferred Shares Pref. Payment Rate Stock Returns Time DCI SPY 1 0.03 0.05 23 0.25 0.18 0.1 0.02 4 0.08 0.06 Par Value Time left 3:53:55 80.80 250,000 40.00% 3.00% Mkt Price (Quoted % of Par) 10,000,000 50.00 10,000,000 70.00 5.00% 10,000,000 131.00 12.00%
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