Debt-equity-outstanding of zero coupon debt

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A friend that has a mid-sized company has hired you and she would like to use you as a consultant. She wants you to calculate the WACC for her firm. She gives you the following information:

Debt

The firm has face value of $150,000,000 outstanding of zero coupon debt that has a yield to maturity of 4.20%.

Equity

The firm has stock with 70 million shares outstanding, a tax rate of 35%, and a beta of 1.2. The firm is expected to pay a dividend of $2.40 next year and it is expected to grow by 4% for the foreseeable future. The expected return on the market is 8% and the risk free rate is 1.50%. What is the WACC of the company?

Reference no: EM131063344

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