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What is the capital structure of this company based on market values?

Bond issue #1, maturity 12 years, coupon rate 9%, current YTM 9.75%, book value $10 million

Bond issue #2, maturity 16 years, coupon rate 9%, current YTM 7.75%, book value $15 million

Preferred stock, 500,000 shares, par $10 per share

Common stock, par $1 per share, book value $10 million

Market price of preferred stock is $17.50, market price of common stock is $15

What is the WACC if:

Tax rate = 40%

Preferred stock dividend = $1.50 per share

Common stock dividend = $.375 per share

Beta is 1.15

RFR = 5.21%

Expected return of the market = 14%

Financial Management, Finance

  • Category:- Financial Management
  • Reference No.:- M91768220

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