Maurice Tutor

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    Argosy University/ Phoniex University/
    Nov-2005 - Oct-2011

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    Phoniex University
    Oct-2001 - Nov-2016

Category > Accounting Posted 18 Aug 2017 My Price 9.00

Parrothead Enterprises

You are given the following information concerning Parrothead Enterprises:

Debt:

9,600 7.1 percent coupon bonds outstanding, with 24 years to maturity and a quoted price of 105.5. These bonds pay interest semiannually.
   
Common stock:

255,000 shares of common stock selling for $65.10 per share. The stock has a beta of .91 and will pay a dividend of $3.30 next year. The dividend is expected to grow by 5.1 percent per year indefinitely.
   
Preferred stock: 8,600 shares of 4.55 percent preferred stock selling at $94.60 per share.
   
Market: A 11.4 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 %

 

Answers

Maurice Tutor
(5)
Status NEW Posted 18 Aug 2017 10:08 PM My Price 9.00

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