Calculating the WACC You are given the following information concerning PACO Enterprises • Debt: 13,000 outstanding, tha

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Calculating The Wacc You Are Given The Following Information Concerning Paco Enterprises Debt 13 000 Outstanding Tha 1 (33.24 KiB) Viewed 36 times

Calculating the WACC You are given the following information concerning PACO Enterprises • Debt: 13,000 outstanding, that pay $30 semi-annual coupon payments with 8 years to maturity. The bond currently sells for 102.5 percent of its face value of $1,000. The corporate tax rate is 22%. • Common stock: 345,000 shares of common stock selling for $ 76.50 per share. The stock will pay dividend of $3.80 next year. The dividend is expected to grow by 5 percent per year indefinitely (Note: take full decimal places in the middle steps and round your FINAL answer to 2 decimal places without $ or % (ie. 1.23)] (a) Calculate the after-tax cost of debt using EXCEL spreadsheet. (1 mark) Ans: Ro(after tax) = (b) Calculate the cost of equity. (1 mark) Ans: Re= % (c) Calculate the total market value of debt (MV), market value of equity MV) and market value of the firm (V). (3 marks) Ans: MVo=$ MV=$ VES (d) Calculate the company's WACC (1 mark) Ans