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Calculate the WACC for the company

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Question - You are tasked with estimating the WACC for your employer. There is one bond issue with 14 years to maturity, a $700,000 face value, and 7% coupon rate, payable semi-annually. The bonds' quoted price is 109.38. There are 1,000 preferred shares outstanding. Each share, with a current price of $800, pays an annual $40 dividend. There are 30,000 common shares outstanding with a current price of $50 per share. Last week, the board issued a $4.00 dividend per common share. Cash dividends are expected to indefinitely grow at 3% per year. The corporate tax rate is 25%. Calculate the WACC for the company.

A. Cost of common share equity (nearest 1/100 of one percent without % symbol, e.g. 6.98)?

B. Cost of preferred share equity (nearest 1/100 of one percent without % symbol, e.g. 6.98)?

C. Cost of debt (nearest 1/100 of one percent without % symbol, e.g. 6.98)?

D. Weighting of common share equity (nearest 1/100 of one percent without % symbol, e.g. 6.98)?

E. Weighted average cost of capital (nearest 1/100 of one percent without % symbol, e.g. 6.98)?

Reference no: EM132968076

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