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G company's current share price is$19.85 and it is expected to pay a $0.90 dividend per share next year. After that, the firm's dividends are expected to grow at a rate of 3.7% per year.

a. What is an estimate of G Company's cost of equity?

b. G company also has preferred stock outstanding that pays a $2.25 per share fixed dividend. If this stick is currently priced at $28.20, what is G Company's cost of preferred stock?

c. G Company has existing debt issued three years ago with a coupon rate of 6.1%. The firm just issued new debt at par with a coupon rate of 6.8%. What is G Company’s cost of debt?

d. G company has 4.7 million common shares outstanding and 1.5 million preferred shares outstanding, and its equity has a total book value of $50.0 million. Its liabilities have a market value of $20.3 million. If f company's common and preferred shares are priced as in parts (a) and (b), what is the market value of g company's assets?

 

e. G company faces a 40% tax rate. Given the info. in parts a through d, and your answers to those problems, what is g company's WACC?

Financial Management, Finance

  • Category:- Financial Management
  • Reference No.:- M91610524

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