The tax margin bracket is 35%. Since there are 4 class of libabilities on the balance sheet, include all of the 4 libabilities to calculate WACC.
– 9,500,000 shares of COMMON STOCK outstanding. The shares are trading at $30.65 per share. The most recent EPS is $3.20. Earnings will grow at 0.70%. Must use the Gordon Growth Model to try to estimate the required rate of return.
-There are 2,000,000 shares of PREFERRED STOCK. These stocks have an annual dividend of $4.00. The shares are trading for $40.30
– There’s an issue of 60,000 COUPON bonds. They have a face value of $1000, pay annual 5% coupons, and will mature in 15 years. The securities are currently trading for $1,200.40
– The company has 400 short-term commercial paper notes outstanding, which have a face value of $1000 that will mature in 20 days. The notes currently sell for 70,800.66
any help would be appreciated!!
1 Answer
Gordon Growth Model requires the Next Div, which is missing here.