I am looking an answer to this; WACC
Cost of Debt #1
30 year bonds
Current Price 98.25% of par value
7.5% coupon rate
Semi Annual Bond
12 years to maturity
tax rate 40%
???What is total cost of debt?? I got 4.5%
Pref. Stock #2
Dividend $3.25
Current Price $63.25
???What is the cost of preferred??? I got 5.1%
Equity #3
Risk Free Rate 7.00%
Market Risk Premium 6.00%
Stock Beta .6
???What is the cost of equity??? I got 10.6%
Debt/Equity #4
6,000 Bonds outstanding selling @ 98.25% of Par Value
45,000 Preffered stock @ $63.25
350,000 Shares of COmmon Stock @ 28.00 per share
???What is WACC??? — ????
Given the WACC calculate the NPV for the following capital budgeting decision
Investment is: $250,000
Cash Flows
yr 1 -50,000
yr 2 65,000
yr 3 75,000
yr 4 95,000
yr 5 215,000
???NPV IS???
??? Decision??? ACCEPT / REJECT
??? Calculate Payback????