Calculate the WACC for the following company. The company has a capital structure that consists of...

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Finance

Calculate the WACC for the following company. The company has acapital structure that consists of 50% debt and 50% common stockthe company’s CFO has obtained the following information:
The yield to maturity on the company’s bonds is 7%
The coupon rate on the company’s bonds is 5%
The next expected dividend is expected to be $7.00
The dividend is expected to grow at a constant rate of 5% peryear
The stock price is currently $75 per share
The tax rate is 35%
What is the WACC?
Calculate the WACC for the following company: Jelly Inc.’starget capital structure is 40% debt, 10% preferred stock, and 50%common stock.
The company’s 15-year, 7% coupon, 1000 par bonds are sellingfor $980
The risk-free rate is 5%
The expected return on the market is 10%
Jelly ‘s beta is 1.2
The company’s tax rate is 30%
Preferred stock price is $90, and the preferred dividend is$9
What is Jelly’s WACC?
     3.  A company just paida $2.00 per share dividend on its common stock. The dividend isexpected to grow at a constant rate of 7 percent per year. Thestock currently sells for $42 a share. What is the cost ofequity?
Answer should be one decimal point. So, if the answer is 8.12%,enter 8.1.
    4. Outdoor Enterprises has bondsoutstanding that carry an annual coupon of 10 percent. The bondsmature in 15 years and are currently priced at $1,050. The parvalue of the bond is $1,000. What is the firm's pre-tax cost ofdebt?
     5. Advanced Products hasoutstanding bonds that are currently priced at $980. The bondsmature in 12 years and carry an 8% annual coupon. The tax rate is40%. What is the firm’s after-tax cost of debt?

Answer & Explanation Solved by verified expert

4.4 Ratings (654 Votes)

1 WACC wd x rd x 1 tax we x re where wd weight of debt 50 we weight of equity 50 rd cost of debt 7 tax 35 re cost of equity D1 P g 775 5 1433 See Answer

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Calculate the WACC for the following company. The company has acapital structure that consists of 50% debt and 50% common stockthe company’s CFO has obtained the following information:The yield to maturity on the company’s bonds is 7%The coupon rate on the company’s bonds is 5%The next expected dividend is expected to be $7.00The dividend is expected to grow at a constant rate of 5% peryearThe stock price is currently $75 per shareThe tax rate is 35%What is the WACC?Calculate the WACC for the following company: Jelly Inc.’starget capital structure is 40% debt, 10% preferred stock, and 50%common stock.The company’s 15-year, 7% coupon, 1000 par bonds are sellingfor $980The risk-free rate is 5%The expected return on the market is 10%Jelly ‘s beta is 1.2The company’s tax rate is 30%Preferred stock price is $90, and the preferred dividend is$9What is Jelly’s WACC? 3. A company just paida $2.00 per share dividend on its common stock. The dividend isexpected to grow at a constant rate of 7 percent per year. Thestock currently sells for $42 a share. What is the cost ofequity?Answer should be one decimal point. So, if the answer is 8.12%,enter 8.1. 4. Outdoor Enterprises has bondsoutstanding that carry an annual coupon of 10 percent. The bondsmature in 15 years and are currently priced at $1,050. The parvalue of the bond is $1,000. What is the firm's pre-tax cost ofdebt? 5. Advanced Products hasoutstanding bonds that are currently priced at $980. The bondsmature in 12 years and carry an 8% annual coupon. The tax rate is40%. What is the firm’s after-tax cost of debt?