You have been assigned to calculate the weighted average cost of capital (WACC) of XYZ Corporation. The target capital structure of xyz is %40 debt and the remaining is common equity. Xyz’s bonds have a yield of %12,35. The Corporation paid dividend of $3.25 and the future dividends are expected to
You have been assigned to calculate the weighted average cost of capital (WACC) of XYZ Corporation. The target capital structure of xyz is %40 debt and the remaining is common equity. Xyz’s bonds have a yield of %12,35. The Corporation paid dividend of $3.25 and the future dividends are expected to
Chapter13: Capital Structure Concepts
Section: Chapter Questions
Problem 4P
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You have been assigned to calculate the weighted average cost of capital (WACC) of XYZ Corporation. The target capital structure of xyz is %40 debt and the remaining is common equity. Xyz’s bonds have a yield of %12,35. The Corporation paid dividend of $3.25 and the future dividends are expected to grow at a constant rate of %4. The current market price per share of common stock is $22.15. The flotation costs are %6 of price per share. The tax bracket is %40. Calculate the wacc when the Corporation is to finance its investments through a new stock issue.
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You have been assigned to calculate the weighted average cost of capital (WACC) of XYZ corporation. The target capital structure of XYZ is 40.00% debt and the remaining is
common equity. XYZ's bonds have a yield of 12.35%. The corporation paid dividend of $3.25 and the future dividends are expected to grow at a constant rate of 4.00%. The
current market price per share of common stock is $22.15. The flotation costs are 6.00% of price per share. The tax bracket is 40.00%. Calculate the WACC when the
corporation is to finance its investments through a new stock issue.
Your Answer:
(Round to TWO decimals.)
The WACC is:
96.
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