Terek Corporation has 7.5 million shares of common stock outstanding, 280,000 shares of 4 percent preferred stock outsta
Posted: Sun May 08, 2022 10:14 am
Terek Corporation has 7.5 million shares of common stock
outstanding, 280,000 shares of 4 percent preferred stock
outstanding ($100 par), and 180,000 6 percent semiannual coupon
bonds outstanding, Par value $1,000 each. The common stock
currently sells for $50 per share and has a beta of 1.6, the
preferred stock currently sells for $45 per share, and the bonds
have 24 years to maturity and sell for 130.67 percent of par. The
market risk premium is 8 percent/ T-bills are yielding 3 percent
and the company's tax rate is 21 percent.
Calculate the weights of each source of capital. (Debt,
preferred stock and common stock, and weighted average cost
capital)
outstanding, 280,000 shares of 4 percent preferred stock
outstanding ($100 par), and 180,000 6 percent semiannual coupon
bonds outstanding, Par value $1,000 each. The common stock
currently sells for $50 per share and has a beta of 1.6, the
preferred stock currently sells for $45 per share, and the bonds
have 24 years to maturity and sell for 130.67 percent of par. The
market risk premium is 8 percent/ T-bills are yielding 3 percent
and the company's tax rate is 21 percent.
Calculate the weights of each source of capital. (Debt,
preferred stock and common stock, and weighted average cost
capital)