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XYZ Company holds 30% Debt, 30% Preferred stock, 40% Common stock. Interest rate on debt is 7.50%. Price of preferred stock is $90, and dividend on preferred stock is $6.00. Company just paid dividend of $2.50 on Common stock and price of Common stock is $30. Dividend on common stock grows at 5%. Company pays tax at 40%. Calculate the WACC of XYZ Company. a) 9.75% b) 8.85% c) 7.58% d) 9.58%

XYZ Company holds 30% Debt, 30% Preferred stock, 40% Common stock. Interest rate on debt is 7.50%. Price of preferred stock is $90, and dividend on preferred stock is $6.00. Company just paid dividend of $2.50 on Common stock and price of Common stock is $30. Dividend on common stock grows at 5%. Company pays tax at 40%. Calculate the WACC of XYZ Company. a) 9.75% b) 8.85% c) 7.58% d) 9.58%

Managerial Accounting: The Cornerstone of Business Decision-Making
Managerial Accounting: The Cornerstone of Business Decision-Making
7th Edition
ISBN:9781337115773
Author:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Publisher:Maryanne M. Mowen, Don R. Hansen, Dan L. Heitger
Chapter15: Financial Statement Analysis
Section: Chapter Questions
Problem 55E: Rebert Inc. showed the following balances for last year: Reberts net income for last year was...
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XYZ Company holds 30% Debt, 30% Preferred stock, 40% Common stock. Interest rate on debt is 7.50%. Price of preferred stock is $90, and dividend on preferred stock is $6.00. Company just paid dividend of $2.50 on Common stock and price of Common stock is $30. Dividend on common stock grows at 5%. Company pays tax at 40%. Calculate the WACC of XYZ Company. a) 9.75% b) 8.85% c) 7.58% d) 9.58%
Transcribed Image Text:XYZ Company holds 30% Debt, 30% Preferred stock, 40% Common stock. Interest rate on debt is 7.50%. Price of preferred stock is $90, and dividend on preferred stock is $6.00. Company just paid dividend of $2.50 on Common stock and price of Common stock is $30. Dividend on common stock grows at 5%. Company pays tax at 40%. Calculate the WACC of XYZ Company. a) 9.75% b) 8.85% c) 7.58% d) 9.58%
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