Question
In: Finance
Consider the following information for GAP, Inc., Debt: 3,000 9 percent coupon bonds outstanding, $1,000...
| Consider the following information for GAP, Inc., |
| Debt: | 3,000 9 percent coupon bonds outstanding, $1,000 par value, 21 years to maturity, selling for 102 percent of par; the bonds make semiannual payments. | ||
| Common stock: | 63,000 shares outstanding, selling for $60 per share; the beta is 1.16. | ||
| Preferred stock: | 10,000 shares of 8 percent preferred stock outstanding, currently selling for $105 per share. | ||
| Market: | 10 percent market risk premium and 8 percent risk-free rate. | ||
| Assume the company's tax rate is 35 percent. |
| Required: |
| Find the WACC. (Do not round your intermediate calculations.) |
Solutions
Expert Solution
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jeff jeffy answered 1 year agoRelated Solutions
Consider the following information for GAP, Inc., Debt: 5,500 8.5 percent coupon bonds outstanding, $1,000 par...
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selling for $63 per share; the beta is 1.1. Preferred stock: 15,500
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selling for $63 per share; the beta is 1.1. Preferred stock: 15,500
shares of 7.5 percent preferred stock outstanding, currently
selling for $107 per share. Market: 10 percent market risk premium
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Debt:
3,000 7 percent coupon bonds outstanding, $1,000 par value, 20
years to maturity, selling for 103 percent of par; the bonds make
semiannual payments.
Common stock:
72,000 shares outstanding, selling for $59 per share; the beta
is 1.14.
Preferred stock:
10,000 shares of 5.5 percent preferred stock outstanding,
currently selling for $105 per share.
Market:
8 percent market risk premium and 4.5 percent risk-free
rate.
Assume the company's tax...
Consider the following information for Evenflow Power Co., Debt: 3,000 8 percent coupon bonds outstanding,...
Consider the following information for Evenflow Power Co.,
Debt:
3,000 8 percent coupon bonds outstanding, $1,000 par value, 18
years to maturity, selling for 104 percent of par; the bonds make
semiannual payments.
Common stock:
60,000 shares outstanding, selling for $59 per share; the beta
is 1.18.
Preferred stock:
9,500 shares of 7 percent preferred stock outstanding,
currently selling for $106 per share.
Market:
9 percent market risk premium and 6.5 percent risk-free
rate.
Assume the company's tax...
Consider the following information for Evenflow Power Co., Debt: 3,500 6.5 percent coupon bonds outstanding, $1,000...
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value, 21 years to maturity, selling for 104 percent of par; the
bonds make semiannual payments.
Common stock: 87,500 shares outstanding, selling for $55 per
share; the beta is 1.2.
Preferred stock: 12,500 shares of 5.5 percent preferred stock
outstanding, currently selling for $107 per share.
Market: 7.5 percent market risk premium and 4.5 percent
risk-free rate. Assume the company's tax rate is...
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5,000 7.5 percent coupon bonds outstanding, $1,000 par value, 20
years to maturity, selling for 104 percent of par; the bonds make
semiannual payments. Common stock: 105,000 shares outstanding,
selling for $61 per share; the beta is 1.18. Preferred stock:
15,500 shares of 6.5 percent preferred stock outstanding, currently
selling for $106 per share. Market: 9 percent market risk premium
and 6.5 percent risk-free rate. Assume the company's tax rate is...
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4,500 8.5 percent coupon bonds outstanding, $1,000 par value, 19
years to maturity, selling for 104 percent of par; the bonds make
semiannual payments. Common stock: 99,000 shares outstanding,
selling for $64 per share; the beta is 1.13. Preferred stock:
13,500 shares of 8 percent preferred stock outstanding, currently
selling for $106 per share. Market: 9.5 percent market risk premium
and 7.5 percent risk-free rate. Assume the company's tax rate is...
Consider the following information for Evenflow Power Co., Debt: 4,000 5.5 percent coupon bonds outstanding, $1,000...
Consider the following information for Evenflow Power Co., Debt:
4,000 5.5 percent coupon bonds outstanding, $1,000 par value, 23
years to maturity, selling for 105 percent of par; the bonds make
semiannual payments. Common stock: 96,000 shares outstanding,
selling for $58 per share; the beta is 1.15. Preferred stock:
12,000 shares of 4.5 percent preferred stock outstanding, currently
selling for $108 per share. Market: 7.5 percent market risk premium
and 4.5 percent risk-free rate. Assume the company's tax rate is...
Consider the following information for Watson Power Co.: Debt: 5,000 8.5 percent coupon bonds outstanding, $1,000...
Consider the following information for Watson Power Co.: Debt:
5,000 8.5 percent coupon bonds outstanding, $1,000 par value, 21
years to maturity, selling for 105 percent of par; the bonds make
semiannual payments. Common stock: 110,000 shares outstanding,
selling for $58 per share; the beta is 1.07. Preferred stock:
17,500 shares of 8 percent preferred stock outstanding, currently
selling for $106 per share. Market: 10.5 percent market risk
premium and 7.5 percent risk-free rate. Assume the company's tax
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