You are given the following information for Fiala
Industries:
• Preferred stock: 9000 shares of 6.5% preferred stock selling at $94 per share.
• Market: A 12% expected return, a 5% risk free rate and a 35% tax rate.
• Debt: 7000 8.5 % coupon bonds outstanding, with
20 years to maturity and a quoted price of 98. The bonds pay interest
semiannually.
• Common stock: 220,000 shares of common stock
selling for $60 per share. The stock has a beta of .90 and will pay a dividend
of $1.80 next year. The dividend is expected to grow at 6% per year
indefinitely.• Preferred stock: 9000 shares of 6.5% preferred stock selling at $94 per share.
• Market: A 12% expected return, a 5% risk free rate and a 35% tax rate.
What is the WACC for Fiala Industries
TUTORIAL
PREVIEW
|
Cost of debt
YTM:
|
|
|
Nper = 20 x
2=
|
40
|
|
PMT =
100x8.5%x 1/2 =
|
4.25
|
|
PV =
|
-98
|
|
FV =
|
100
|
File name: Fiala Industries.xlsx File type: . xlsx PRICE: 10
