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  1. business
  2. accounting
  3. consider a company financed with 70% equity and 30

Consider a company financed with 70% equity and 30% debt. The company has an issue...

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Accounting

Consider a company financed with 70% equity and 30% debt. The company has an issue of semiannually paying bonds maturing in 10 years with an 8% coupon rate. The current price and face value of this bond is $1,071.06 and $1,000, respectively. The company's stock currently sells for $150 per share. The stock will pay a dividend of $9 per share next year (=Div1). Future dividends are expected to grow at 3% forever. Calculate the company's WACC assuming the corporate income tax rate of 21%.

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