20. You are given the following information for United Aircraft. Assume the companyâs tax rate is 30%.
Preferred Stock: 26,000 shares of preferred stock outstanding, with a dividend of $6.00. The preferred stock currently sells for $105 per share
Common Stock: 500,000 shares outstanding, selling at $75 per share. The current dividend is $3.00 per share, and the dividend is expected to grow at 4%
Debt: 8,000 bonds outstanding. They have a 4.8% coupon, $1,000 par value, 15 years to maturity, selling for 93% of par; coupons are paid semi-annually
A. What are the required returns for Common Stock, Preferred Stock and Debt?
B. What is the WACC for United Aircraft?
20. You are given the following information for United Aircraft. Assume the companyâs tax rate is 30%.
Preferred Stock: 26,000 shares of preferred stock outstanding, with a dividend of $6.00. The preferred stock currently sells for $105 per share
Common Stock: 500,000 shares outstanding, selling at $75 per share. The current dividend is $3.00 per share, and the dividend is expected to grow at 4%
Debt: 8,000 bonds outstanding. They have a 4.8% coupon, $1,000 par value, 15 years to maturity, selling for 93% of par; coupons are paid semi-annually
A. What are the required returns for Common Stock, Preferred Stock and Debt?
B. What is the WACC for United Aircraft?
Related questions
Given the following information for Evenflow Power Co., the WACC is percent. Assume the company's tax rate is 35 percent. (Do not include the percent sign (%). Round your answer to 2 decimal places. (e.g., 32.16))
| Debt: | 8,000 bonds outstanding, 6.5 percent coupon rate (APR), $1,000 par value, 20 years to maturity, selling for 92 percent of par; the bonds make semiannual payments. |
| Common stock: | 250,000 shares outstanding, selling for $57 per share; the beta is 1.05. |
| Preferred stock: | 15,000 shares of 5 percent preferred stock outstanding, currently selling for $93 per share. (Note: a 5% preferred stock means that the dividend is $5) |
| Market: | 8 percent market risk premium and 4.5 percent risk-free rate. |
Information on Gerken Power Co., is shown below. Assume the companyâs tax rate is 35 percent.
| Debt: | 9,500 9 percent coupon bonds outstanding, $1,000 par value, 25 years to maturity, selling for 99 percent of par; the bonds make semiannual payments. | |
| Common stock: | 220,000 shares outstanding, selling for $84.00 per share; beta is 1.25. | |
| Preferred stock: | 13,000 shares of 5.75 percent preferred stock outstanding, currently selling for $97.00 per share. | |
| Market: | 7 percent market risk premium and 4.8 percent risk-free rate. |
