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Keeping Health Strong Corporation (KHSC) makes very good quality supplements for the elderly; it is sold through select geriatric practices in the United States and Europe. Use the information below to determine KCCC's WACC. Show Excel and excel formulas. Can use the CAPM model or a dividend model to find the WACC and Capital Structure through excel which is the ultimate goal.

a) Common Stock: KHSC's common stock has a $3.50 par value; according to the balance sheet, the total par value of the firm's shares is $29,092,000. The firm's stock recently paid a dividend of $9.484053 per share. The dividend growth rate is 6.6%. According to the Financial Times, KHSC's shares are trading at $47.99. The firm's Beta is 2.66.

b) Debt: 7 ½ years ago the firm issued 20-year zero coupon bonds with a $361 million face value. These currently trade at 34.081. As with all zero-coupon bonds, assume they are semi-annual.

c) Preferred Stock: Ten years ago, KHSC issued 5.65% preferred shares that have a total face value of $37.74 million. These shares currently trade at $137.4696

d) Market information: The current risk-free rate is 5.15%, and the market risk premium is 9.35%. KHSC recently relocated to Ohio, lowering its corporate tax rate to 42%.

Debt

Equity

Preferred



Returns

Returns

Returns



N

Rf rate

Div Rate



I

Beta

Par Value



PV

Mkt Risk Prem

Dividend



PMT

CAPM

Current Price



FV




Return on Preferred














Debt Capitalization
Market Capitalization

Preferred Capitalization


Bond Price

Stock Price

Share Price



# Bonds

# shares

# shares



Debt Cap

Market Cap

Preferred Cap                      -  













Enterprise Value
                                                                  -  
















Weight

Weight

Weight














Tax rate
























                        -  

                     -  
Total WACC

Financial Management, Finance

  • Category:- Financial Management
  • Reference No.:- M92803338

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