What is the capital structure of this company based on market values?
Bond issue #1, maturity 12 years, coupon rate 9%, current YTM 9.75%, book value $10 million
Bond issue #2, maturity 16 years, coupon rate 9%, current YTM 7.75%, book value $15 million
Preferred stock, 500,000 shares, par $10 per share
Common stock, par $1 per share, book value $10 million
Market price of preferred stock is $17.50, market price of common stock is $15
What is the WACC if:
Tax rate = 40%
Preferred stock dividend = $1.50 per share
Common stock dividend = $.375 per share
Beta is 1.15
RFR = 5.21%
Expected return of the market = 14%