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28 Sep 2019
You are given the following information concerning Parrothead Enterprises:
Debt: 10,600 7.1 percent coupon bonds outstanding, with 24 years to maturity and a quoted price of 108. These bonds pay interest semiannually.
Common stock: 305,000 shares of common stock selling for $66.10 per share. The stock has a beta of 1.02 and will pay a dividend of $4.30 next year. The dividend is expected to grow by 5.1 percent per year indefinitely.
Preferred stock: 9,600 shares of 4.55 percent preferred stock selling at $95.60 per share. Market: A 10.4 percent expected return, a risk-free rate of 5.1 percent, and a 34 percent tax rate.
| You are given the following information concerning Parrothead Enterprises: |
| Debt: | 10,600 7.1 percent coupon bonds outstanding, with 24 years to maturity and a quoted price of 108. These bonds pay interest semiannually. |
| Common stock: | 305,000 shares of common stock selling for $66.10 per share. The stock has a beta of 1.02 and will pay a dividend of $4.30 next year. The dividend is expected to grow by 5.1 percent per year indefinitely. |
| Preferred stock: | 9,600 shares of 4.55 percent preferred stock selling at $95.60 per share. |
| Market: | A 10.4 percent expected return, a risk-free rate of 5.1 percent, and a 34 percent tax rate. |
Jamar FerryLv2
28 Sep 2019
Related questions
You are given the following information concerning Parrothead Enterprises:
| Debt: | 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. | |
| Common stock: | 255,000 shares of common stock selling for $65.10 per share. The stock has a beta of .91 and will pay a dividend of $3.30 next year. The dividend is expected to grow by 5.1 percent per year indefinitely. | |
| Preferred stock: | 8,600 shares of 4.55 percent preferred stock selling at $94.60 per share. | |
| Market: | An expected return of 11.4 percent, a risk-free rate of 5.05 percent, and a 34 percent tax rate. |
Calculate the WACC for Parrothead Enterprises. (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
WACC %
