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Beta for common stock is around 0.7. A share of common stock was selling for €9.10, and a share of preferred stock was selling for €15.25. The preferred stock also paid a constant dividend of €1.07. Wulfurt Family Chocolates sold issuances of 1) a 10-year coupon bond which has a yield to maturity of 6.5%, 2) preferred stock, and 3) common stock on the open market. NOTE: The company's cost of capital will be the weighted average of the required rate of return on each financing source. Ignore flotation costs. The market value of Wulfurt Family Chocolate's bonds is €54,800,000. Wulfurt has 30 million common shares outstanding. Wulfurt has 2 million preferred shares outstanding. The interest rate on Wulfurt Family Chocolate's notes payable is 6.5%. The market value of the notes payable is equal to the value shown on their balance sheet. Assume a 34% corporate tax rate. The company's growth rate is equal to the dividend growth rate. QUESTIONS: What are the weights for each capital source using book values? Using market values? What advantages does using the book value have when determining the cost of capital? What advantages does using the market value have? Total Liablities of 108589 notes payabe 15376 and long term debt 67401 Shareholder Equity common stock 145710 preferred stock 31599 retained earnings 54391 total 231700 total liabilites and shareholders assets 448878 NEED IN EXCEL FORMAT W/FORMULAS.

Financial Management, Finance

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