Calculate icbm corporation weighted average cost of capital

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Reference no: EM132975425

The ICBM Corporation has provided you with the following information:

a. The debt structure of the firm consists of 10,000 bonds with a face value of $100, a coupon rate of 5% and a price of $90.00 and 10 years to maturity. Assume semi-annual coupon payments and a yield to maturity of 5.10%.

b. 400,000 ordinary shares selling for $90 per share. The shares have a beta of 1.30 and a dividend of $5.00 will be paid next year. The dividends are expected to grow at 5% forever.

c. 35,000 preference shares selling at $100.00 per share and paying a 7% dividend.

d. The stock market has an expected return of 13%, the risk free rate is 4% and the tax rate is 30%.

Problem 1: Calculate ICBM Corporation's weighted average cost of capital (WACC).

Reference no: EM132975425

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