Pininfarina Company recently hired you as a consultant to estimate the company’s WACC. You have obtained the following i
Posted: Sun Jun 05, 2022 7:42 am
Pininfarina Company recently hired you as a consultant to
estimate the company’s WACC. You have obtained the following
information. (1) The company has noncallable bonds with a $1,000
face value and coupon rate of 10% (paid semi-annually). The bonds
mature in 4 years and have a current price of $1,140. (2) The
company’s tax rate is 30%. (3) The current price of the company’s
stock is $80.00 per share. Dividends are expected to grow at 5%
indefinitely, and the most recent dividend paid by the company was
$2.75 per share. (4) The target capital structure of the company
consists of 41.5% debt, and the balance is common equity. (5) The
company is not planning to issue any new common stock. What is
Pininfarina Company’s WACC?
estimate the company’s WACC. You have obtained the following
information. (1) The company has noncallable bonds with a $1,000
face value and coupon rate of 10% (paid semi-annually). The bonds
mature in 4 years and have a current price of $1,140. (2) The
company’s tax rate is 30%. (3) The current price of the company’s
stock is $80.00 per share. Dividends are expected to grow at 5%
indefinitely, and the most recent dividend paid by the company was
$2.75 per share. (4) The target capital structure of the company
consists of 41.5% debt, and the balance is common equity. (5) The
company is not planning to issue any new common stock. What is
Pininfarina Company’s WACC?