Three interns, Amber, Courtney, and Jasmine, who are currently working at CSD have been provided the following information. CSD’s optimal market value capital structure is comprised of 70% equity and 30% debt. Their marginal tax rate is 40%. The market price of their stock is $34.00. They just paid a dividend of $3.00 and the dividend is expected to grow at 5% forever. Their bonds have a market price of $960.00 and have 20 years to maturity. They pay semi-annually and have a coupon rate of 6.00%. 33. Using the information concerning CSD provided above, Amber will compute that CSD’s cost of equity is _____%.
a. 13.914
b. 14.265
c. 14.533
d. 14.844
e. 15.123
Using the information concerning CSD provided above, Courtney will compute that CSD’s beforetax cost of debt is _____%.
a. 6.176
b. 6.235
c. 6.356
d. 6.441
e. 6.517
Using the information concerning CSD provided above, Jasmine will compute that CSD’s WACC is _____%.
a. 11.129
b. 11.502
c. 11.899
d. 12.236
e. 12.675