# I am looking an answer to this; WACC Cost of Debt #1 30

Question # 00004212 Posted By: expert-mustang Updated on: 11/27/2013 10:47 PM Due on: 11/28/2013
Subject Finance Topic Finance Tutorials:
Question

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%
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????
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1. ## Solution: I am looking an answer to this; WACC Cost of Debt #1 30

Tutorial # 00004004 Posted By: expert-mustang Posted on: 11/27/2013 10:48 PM
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WACC_-_2.xls (27.5 KB)

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