1) what is the WACC for a firm 30 debt, 10% preffered stock, and 60% common equity if the respective costs for these components are 7% before tax cost of debt, 9% before tax cost of preffered stock, and 12% before tax cost of common equity? the tax rate is 40%
What is the WACC?
2) Smith corpration has a $1000 par value bond outstanding paying annual interest of 8% (coupon rate ) the bond matures in 10 years. if the present yield to maturity for this bond is 6% calculate the annual coupon payment (annual interest payment) and current price of the bond using annual compounding.
What is the annual coupon payment?
What is the current price of the bond?