Please answer it correctly. Here is a short problems.Please solve all problems correctly. Make sure the answers arecorrect. I would really appreciate your effort.Thanks.
1). The Oriole Products Co. currently has debtwith a market value of $275 million outstanding. The debt consistsof 9 percent coupon bonds (semiannual coupon payments) which have amaturity of 15 years and are currently priced at $1,429.26 perbond. The firm also has an issue of 2 million preferred sharesoutstanding with a market price of $14 per share. The preferredshares pay an annual dividend of $1.20. Oriole also has 14 millionshares of common stock outstanding with a price of $20.00 pershare. The firm is expected to pay a $2.20 common dividend one yearfrom today, and that dividend is expected to increase by 4 percentper year forever. If Oriole is subject to a 40 percent marginal taxrate, then what is the firm’s weighted average cost ofcapital?
Excel Template
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Calculate the weights for debt, common equity, andpreferred equity. (Round intermediate calculations and finalanswers to 4 decimal places, e.g. 1.2514.)
Debt _________?
Preferred Equity ________?
Common Equity ________?
Calculate the cost of debt. (Round intermediatecalculations to 4 decimal places, e.g. 1.2514 and final answer to 2decimal places, e.g. 15.25%.)
Cost of debt _______%
Calculate the cost of preferred equity. (Roundintermediate calculations to 4 decimal places, e.g. 1.2514 andfinal answer to 2 decimal places, e.g. 15.25%.)
Cost of preferred equity _________%
Calculate the cost of common equity. (Roundintermediate calculations to 4 decimal places, e.g. 1.2514 andfinal answer to 0 decimal places, e.g. 15%.)
Cost of common equity_________%
What is the firm’s weighted average cost of capital?(Round intermediate calculations to 4 decimal places, e.g.1.2514 and final answer to 2 decimal places, e.g.15.25%.)
WACC______%
