What is the firms cost of each form of financing calculate


You are given the following information concerning Parrothead Enterprises: Debt: 10,600 7.1 percent coupon bonds outstanding, with 24 years to maturity and a quoted price of 108. These bonds pay interest semiannually. Common stock: 305,000 shares of common stock selling for $66.10 per share. The stock has a beta of 1.02 and will pay a dividend of $4.30 next year. The dividend is expected to grow by 5.1 percent per year indefinitely. Preferred stock: 9,600 shares of 4.55 percent preferred stock selling at $95.60 per share. Market: A 10.4 percent expected return, a risk-free rate of 5.1 percent, and a 34 percent tax rate. Required: What is the firm's cost of each form of financing? (Do not round intermediate calculations. Enter your answers as a percentage rounded to 2 decimal places (e.g., 32.16).) Aftertax cost of debt % Cost of preferred stock % Cost of equity % Calculate the WACC for Parrothead Enterprises. (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).) WACC %

Request for Solution File

Ask an Expert for Answer!!
Financial Management: What is the firms cost of each form of financing calculate
Reference No:- TGS02336404

Expected delivery within 24 Hours