Newington Chemicals has planned capital expenditures of $1,500,000 for the coming fiscal year. They have prioritized fiv
Posted: Thu Apr 28, 2022 1:33 pm
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Newington Chemicals has planned capital expenditures of $1,500,000 for the coming fiscal year. They have prioritized five projects at a total cost of $1,500,000, to be financed in the following way: Debt $200,000 Preferred Stock 200,000 Common Equity 600,000 The bonds have a coupon rate of 7% and will sell for par value. The preferred stock is 10%, $100 par. It sells for par value with $5 per share flotation costs. The common stock of the company sells for $73 per share with flotation costs of $3.00 per share. It is expected to pay a $9 dividend in the coming year. The company's growth rate is expected to be constant at 4%. The company's tax rate is 30%. The Net Income for the Company this year is expected to be $1,000,000. The dividend payout ratio is 70%. Assume the beginning retained earnings balance = 0. PRIMARY POST: Complete the required calculations, fill in the highlighted areas in the chart and post your answer in Discuss in the below Table Format: (Fill in all yellow highlighted areas in the below chart and then copy and paste into your Discuss Post) (Include answers with work similar to Example below) EXAMPLE: DEBT C/S 30/90 = .33 50/90 = .56 9.465(1-3) = 6.63% 4/50 +.05 = 13% 2.1879 7.28 WACC 1 Source: Weight: Debt Cost of Capital: % Weighted Cost: RANGE: P/S C/E WACC 1 = WACC 2 Weight: Source Debt Cost of Capital: % Weighted Cost: RANGE: P/S C/E WACC 2 =
Newington Chemicals has planned capital expenditures of $1,500,000 for the coming fiscal year. They have prioritized five projects at a total cost of $1,500,000, to be financed in the following way: Debt $200,000 Preferred Stock 200,000 Common Equity 600,000 The bonds have a coupon rate of 7% and will sell for par value. The preferred stock is 10%, $100 par. It sells for par value with $5 per share flotation costs. The common stock of the company sells for $73 per share with flotation costs of $3.00 per share. It is expected to pay a $9 dividend in the coming year. The company's growth rate is expected to be constant at 4%. The company's tax rate is 30%. The Net Income for the Company this year is expected to be $1,000,000. The dividend payout ratio is 70%. Assume the beginning retained earnings balance = 0. PRIMARY POST: Complete the required calculations, fill in the highlighted areas in the chart and post your answer in Discuss in the below Table Format: (Fill in all yellow highlighted areas in the below chart and then copy and paste into your Discuss Post) (Include answers with work similar to Example below) EXAMPLE: DEBT C/S 30/90 = .33 50/90 = .56 9.465(1-3) = 6.63% 4/50 +.05 = 13% 2.1879 7.28 WACC 1 Source: Weight: Debt Cost of Capital: % Weighted Cost: RANGE: P/S C/E WACC 1 = WACC 2 Weight: Source Debt Cost of Capital: % Weighted Cost: RANGE: P/S C/E WACC 2 =