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You are given the following information concerning Parrothead Enterprises Debt 9200 6.4 percent coupon bonds outstanding with 23 years to maturity and a quoted price of 1045 These bonds pay

You are given the following information concerning Parrothead Enterprises: Debt: 9,200 6.4 percent coupon bonds outstanding, with 23 years to maturity and a quoted price of 104.5. These bonds pay interest semiannually. Common stock: 235,000 shares of common stock selling for $64.70 per share. The stock has a beta of .87 and will pay a dividend of $2.90 next year. The dividend is expected to grow by 5.2 percent per year indefinitely. Preferred stock: 8,200 shares of 4.6 percent preferred stock selling at $94.20 per share. Market: A 11.8 percent expected return, a risk-free rate of 5.2 percent, and a 30 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 %

Apr 09 2020 View more View Less

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