The Centurion Corp. has 3 million shares of common stock with a current market price of...

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Finance

The Centurion Corp. has 3 million shares of common stock with acurrent market price of $76.00 per share. The most recent dividendpaid (i.e., D₀) on these shares was $2.90. The growthrate for Centurion has been 7.2% in the past and is expected tocontinue in the future. Centurion has a beta of 1.3, the risk-freerate is 3.6%, and the return on the market is 10.1%
Assume Centurion has $130 million in par value of long-termbonds outstanding that currently sell for $1,091.96 per $1,000 parvalue. The bonds have a coupon rate of 8% and a maturity of 15years. Assume semi-annual coupon payments
Now assume Centurion has 500,000 shares of preferred stock witha current market price of $109 per share. The annual dividend onthis preferred stock is $9.20 per share.
calculate Centurion’s weighted average cost of capitalusing all of the information in the previous three questions tocalculate market value weights. You may assume that they use theaverage of the CAPM and constant growth models (without flotationcosts) for the cost of common equity

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I AM ASSUMING THE TAX RATE IS 25 IF QUESTION HAS A DIFFERENT TAX RATE PLEASE PUT IN COMMENTS AND I WILL RE DO THE QUESTION Cost of equity using dividend discount D1 price growth rate Cost of equity using dividend discount 29 1072 76 0072 Cost of equity using dividend discount 0040905 0072 Cost of equity using dividend discount 011291 or 11291 Cost of equity using CAPM See Answer

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The Centurion Corp. has 3 million shares of common stock with acurrent market price of $76.00 per share. The most recent dividendpaid (i.e., D0) on these shares was $2.90. The growthrate for Centurion has been 7.2% in the past and is expected tocontinue in the future. Centurion has a beta of 1.3, the risk-freerate is 3.6%, and the return on the market is 10.1%Assume Centurion has $130 million in par value of long-termbonds outstanding that currently sell for $1,091.96 per $1,000 parvalue. The bonds have a coupon rate of 8% and a maturity of 15years. Assume semi-annual coupon paymentsNow assume Centurion has 500,000 shares of preferred stock witha current market price of $109 per share. The annual dividend onthis preferred stock is $9.20 per share.calculate Centurion’s weighted average cost of capitalusing all of the information in the previous three questions tocalculate market value weights. You may assume that they use theaverage of the CAPM and constant growth models (without flotationcosts) for the cost of common equity