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Estimate the company WACC

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Reference no: EM132941042

Question - MEOW Company hired a finance manager, to estimate the company's WACC. The finance manager obtained the following information:

1. The target capital structure of the firm is 30% debt, 10% preferred stock, and 60% common stock.

2. Seido's tax rate is 30%.

3. The firm issued a P2,000,000, 10%, 5-year bond with net proceeds of P1,960,000.

4. The company plans to issue new shares of preferred stocks which are currently selling in the market at P65 per share with a flotation cost of 2% per share. The stocks are expected to pay a P5 dividend per share at the end of the year.

5. The company also plans to issue new shares of common stocks with a current market price of P25 per share and the cost of issuing is 3% per share. At the end of the year, it is expected to pa a dividend of P10 per share with a growth rate of expected to be constant at 5% every year.

Reference no: EM132941042

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