The Lewin Inc. has the following financing outstanding. What is the WACC for the company? Debt 60,000 bonds with an 8% coupon rate and a quoted price of 110; the bonds have 30 years to maturity; the bonds make annual payments; $1,000 par value. 100,000 shares of 6% preferred with a current price of $150, and a par value of $100. 2,000,000 shares of common stock, the current price is $80, and the beta of the stock is 1.2. The corporate tax rate is 25%, the market risk premium is 6%, and the risk-free rate is 3%. Preferred stock Common stock Market (2) What is the cost of Preferred stocks?
The Lewin Inc. has the following financing outstanding. What is the WACC for the company? Debt 60,000 bonds with an 8% coupon rate and a quoted price of 110; the bonds have 30 years to maturity; the bonds make annual payments; $1,000 par value. 100,000 shares of 6% preferred with a current price of $150, and a par value of $100. 2,000,000 shares of common stock, the current price is $80, and the beta of the stock is 1.2. The corporate tax rate is 25%, the market risk premium is 6%, and the risk-free rate is 3%. Preferred stock Common stock Market (2) What is the cost of Preferred stocks?
Chapter20: Financing With Derivatives
Section: Chapter Questions
Problem 17P
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