Andy has 68,000 shares of common stock outstanding at a market price of $46 a share. The common stock just paid a $2.62 annual dividend and has a dividend growth rate of 5.5 percent. There are 22,000 shares of 5.5 percent preferred stock outstanding at a market price of $62 a share. The preferred stock has a par value of $100. The outstanding bonds mature in 11 years, have a total face value of $850,000, a face value per bond of $1,000, and a market price of $970 each. The bonds pay 7.5 percent interest, semiannually. The tax rate is 34 percent. What is the firm's weighted average cost of capital?
Andy has 68,000 shares of common stock outstanding at a market price of $46 a share. The common stock just paid a $2.62 annual dividend and has a dividend growth rate of 5.5 percent. There are 22,000 shares of 5.5 percent preferred stock outstanding at a market price of $62 a share. The preferred stock has a par value of $100. The outstanding bonds mature in 11 years, have a total face value of $850,000, a face value per bond of $1,000, and a market price of $970 each. The bonds pay 7.5 percent interest, semiannually. The tax rate is 34 percent. What is the firm's weighted average cost of capital?
Related questions
Consider the following information for Evenflow Power Co.,
| Debt: | 4,500 6.5 percent coupon bonds outstanding, $1,000 par value, 21 years to maturity, selling for 104 percent of par; the bonds make semiannual payments. | ||
| Common stock: | 103,500 shares outstanding, selling for $65 per share; the beta is 1.05. | ||
| Preferred stock: | 12,500 shares of 5.5 percent preferred stock outstanding, currently selling for $105 per share. | ||
| Market: | 7.5 percent market risk premium and 4.5 percent risk-free rate. | ||
| | |||
Assume the company's tax rate is 34 percent.
Find the WACC. (Do not round your intermediate calculations.)
| | 8.58% |
| | 9.35% |
| | 8.48% |
| | 8.7% |
| | 8.98% |
