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Shares of stock outstanding selling-future dividends

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Reference no: EM13928249

Johnny Cake Ltd. has 8 million shares of stock outstanding selling at $20 per share and an issue of $40 million in 8 percent annual coupon bonds with a maturity of 16 years, selling at 90.5 percent of par. Assume Johnny Cake’s weighted-average tax rate is 34 percent, its next dividend is expected to be $3 per share, and all future dividends are expected to grow at 4 percent per year, indefinitely.

What is its WACC? (Do not round intermediate calculations and round your final answer to 2 decimal places.)

WACC   %

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The assignment required WACC calculation for johny cake limited, the company had both equity and debt into its capital structure, thus WACC calculation has been done taking market value of both the capitals

Reference no: EM13928249

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Reviews

inf928249

12/10/2016 7:13:26 AM

Correct Answer - I had all except for Debt - Can you tell me how 36.2 debt was calculated? Oh I got it, did not check the formula. Thanks its fine. good work.

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