Viduka constructions cfo has collected the following, Ask an Expert

Finance

Viduka Construction's CFO has collected the following information to estimate the company's WACC:

· The company currently has 20-year, 8.5% annual coupon bonds that have a face value of $1,000 and sell for $945.

· The company's stock has a beta nar018-1.jpg 1.20.

· The market risk premium, RPm , equals 5%.

· The risk-free rate is 6%.

· The company has outstanding preferred stock that pays a $2.00 annual dividend. The preferred stock sells for $25 a share.

· The company's tax rate is 40%.

· The company's capital structure consists of 40% long-term debt, 40% common stock, and 20% preferred stock.

What is the company's WACC?

7.95%

8.12%

8.59%

8.67%

10.04%

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Financial Management, Finance

Category:- Financial Management
Reference No.:- M92867064

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