13 25 Wacc For A Firm The Imaginary Products Co Currently Has 300 Million Of Market 1304339

13.25 WACC for a firm: The Imaginary Products Co. currently has $300 million of market value debt outstanding. The 9 percent coupon bonds (semiannual pay) have a maturity of 15 years and are currently priced at $1,440.03 per bond. The firm also has an issue of 2 million preferred shares outstanding with a market price of $12.00. The preferred shares offer an annual dividend of $1.20. Imaginary also has 14 million shares of common stock outstanding with a price of $20.00 per share. The firm is expected to pay a $2.20 common dividend one year from today, and that dividend is expected to increase by 5 percent per year forever. If Imaginary is subject to a 40 percent marginal tax rate, then what is the firm’s weighted average cost of capital? Capital componentNumber outstandingCurrent price Bonds300,000 $1,440.03 Preffered stock2,000,000 $12.00 Common stock14,000,000 $20.00 Coupon rate on debt9% Coupon frequency (per year)2 Bond maturity (years)15 Preferred dividend (annual)$1.20 Expected dividend on common (D1)$2.20 Constant annual dividend growth rate (forever)5% Marginal tax rate40% Capital componentMarket ValueWeightAfter-tax costWeighted Cost (%) Bonds Preferred stock Common stock Total capital (market value) WACC

Connect with a professional writer in 5 simple steps

Please provide as many details about your writing struggle as possible

Academic level of your paper

Type of Paper

When is it due?

How many pages is this assigment?