Question
In: Finance
Sound Systems (SS) has 200,000 shares of common stock outstanding at a market price of $37...
Sound Systems (SS) has 200,000 shares of common stock outstanding at a market price of $37 a share. SS recently paid an annual dividend in the amount of $1.20 per share. The dividend growth rate is 4 percent. SS also has 4,500 bonds outstanding with a face value of $1,000 per bond that are selling at 99 percent of par. The bonds have a 6 percent coupon and a 6.7 percent yield to maturity. If the tax rate is 34 percent, what is the weighted average cost of capital?
6.49%
5.87%
6.26%
5.33%
7.28%
Solutions
jeff jeffy answered 2 years agoRelated Solutions
Sound Systems has 200 shares of common stock outstanding at a market price of $37 a...
Sound Systems has 200 shares of common stock outstanding at a
market price of $37 a share. The firm recently paid an annual
dividend in the amount of $1.20 per share and has a dividend growth
rate of 4 percent. The firm also has 5 bonds outstanding with a
face value of $1,000 per bond that are selling at 99 percent of
par. The bonds have a coupon rate of 6 percent and a yield to
maturity of 6.7 percent....
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selling at 99% of face value. The company's tax rate is...
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