Reference no: EM133377599
Rollins Corporation is estimating its WACC. It's current and target capital structure is 20 percent debt, 20 percent preferred stock, and 60 percent common equity. Its bonds have a 12 percent coupon rate, paid semiannually, a current maturity of 20 years, and sell for $1,040. The firm could sell, at par, $100 preferred stock which pays a $12.00 annual preferred dividend. Rollins' common stock beta is 1.2, and the risk-free rate is 10 percent. Rollins is a constant-growth firm which just paid a dividend of $2.00. Its stock sells for $27.00 per share, and has a growth rate of 3 percent. The floatation cost is 5% for debt, 10% for preferred stock, and 25% for common stock. The firm's marginal tax rate is 40 percent.
Question 1
Part a. Calculate the cost of existing debt.
Part b. Calculate the cost of new debt.
Question 2
Part a. Calculate the cost of existing preferred stock.
Part b. Calculate the cost of new preferred stock.
Question 3
Part a. Calculate the cost of existing common stock.
Part b. Calculate the cost of new common stock.
Question 4
Part a. Calculate the weighted average cost of capital (WACC) for existing capital
Part b. Calculate the weighted average cost of capital (WACC) for new capital
|
What would its cost of equity be if it took on the average
: software industry is 13%. What would its cost of equity be if it took on the average amount of debt for its industry at a cost of debt of 6%
|
|
Why is a self-managing organization a good idea
: Is a self-managing organization a good idea? Why or why not? Could Zappos have done anything to make the transition to the new system smoother? If so, what?
|
|
How much should she be saving at the end of each year
: How much should she be saving at the end of each year leading up to retirement, to reach her retirement income goal? Remember to use the 7 step goal-based
|
|
What is the pension adjustment (pa) for johns defined
: What is the pension adjustment (PA) for john's defined benefit pensionable earnings of $48,685 this past year, if his plan provides a 2% benefit?
|
|
Calculate the cost of existing debt
: Calculate the weighted average cost of capital (WACC) for existing capital and Calculate the weighted average cost of capital (WACC) for new capital
|
|
What database management system was used for the database
: What database management system was used for the database? Did you like the database? Why or why not? Or, share a link to an article on a company
|
|
How this affects a public health professional
: Describe differences and similarities, impact on women, contributing factors to the issue, actions being taken, and how this affects a public health professiona
|
|
What might you find particularly useful in the future
: Explore the guide's sections. In a full paragraph, tell us what you found in or learned from your research guide. What might you find particularly useful
|
|
Describe lsorne of your planet characteristics such as mass
: where you found your information. Be yery careful not to pick the same dwarf planet that any of the other students assigned to post on this topic did-or you
|