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Calculate the WACC for PG given the following: a) The company has outstanding debt that matures in 20 years that has a coupon of 9%. It pays interest semi-annually and the bonds are callable in 3 years at a 3% premium to par. The current price of the bonds is 1214.59. For a reference 20 year Treasuries are yielding 3.5%. (PG bonds are rated AA) b) PG has outstanding preferred that have an 8% coupon, $100 par value and is currently priced at $120. If new preferred was issued the company would incur flotation costs of 5%. c) The company’s stock is currently priced at $100 and the current dividend is $3.00. That dividend is expected to grow at 3% forever. The beta of PG is 0.6 and the RFR and MRP are 3% and 7% respectively. Ignore flotation costs for your cost of equity. d) The target structure is 60% equity, 30% debt and 10% preferred. The tax rate is 40%. e) If the company had no residual cash and new issued equity would incur a flotation cost of 10%. Calculate a new the WACC using only the DCF method for equity and keeping all other factors the same. Comment on your findings
Security Data Company has outstanding 50,000 shares of common stock currently selling at $40 per share. The firm most recently had earnings available for common stockholders of $120,000, but it has decided to retain these funds and is considering eit..
Regarding the auto industry, do you see vehicles being standard across the globe so manufacturers don't need to create different models in different areas? Chances are that in 20 years driverless cars will be common if not prevalent so this industry ..
Use the following information on states of the economy and stock returns to calculate the standard deviation of returns.
Companies in the same industry and work on the criterion mentioned - Short Term Financial Policies of the business
The key variables in the owner wealth maximization process are _____
The Dividend-Discount Model can be used to determine the value of a firm's equity-i.e., the current price of a share of stock. We will use this model to estimate the value of a share of your firm's stock and compare this estimate to the current ma..
Chris invested $150,000 17 months ago. Currently the investment is worth $180,000. Chris knows that the investment paid interest monthly, but he does not know what yield on his investment. What is Chris's annual percentage return (APR) and EAR?
Discuss the performance and financial position of the three companies and in your discussion highlight the possible causes of the differences between the three companies.
This is defined as the difference between a firm’s current assets and current liabilities.
year 1 and year 2 balance sheets of warnick co. appear below together with an income statement for the latest
Which of the following argued that the value of a firm is independent of its capital structure?
You own a portfolio that is 32 percent invested in Stock X, 20 percent in Stock Y, and 48 percent in Stock Z. The expected returns on these three stocks are 6 percent, 19 percent, and 15 percent, respectively. What is the expected return on the portf..
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