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Anderson Corporation has 1 million shares of common stockoutstanding, 1/2 million shares of preferred stock, and 20,000 3.5%semiannual bonds outstanding. The common stock has a beta of 1.2.The corporate bond has a par value of $1,000 each and matures in 14years. Currently the bonds are selling at 94% of their face values.The market risk premium is 9%. The risk-free rate is 3%. The commonstock sells for $40 per share. The preferred stock sells for $75per share and the preferred dividend is $6 per share. IF thecorporate tax rate is 34%;A) What is the after-tax cost of debt capital? Show formulasB) What is the cost of common equity? Show formulasC) What is Anderson's WACC? Show formulas
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