Johnson Industries Cost of Capital
Not what you're looking for?
Johnson Industries provides the following information on the company's common stocks, preferred stocks and bonds:
The company can issue a bond at yield to maturity of 7.85%.
The company pays a dividend on preferred stock of $4.76.
The company just issued a dividend of $5.00 on its common stock. They anticipate that dividends will grow at a constant rate of 5% indefinitely.
The risk-free rate is 6.25%.
The required return on the market is 13.25%.
Johnson's Industries' beta is 1.20.
Preferred stock is currently selling for $68.00.
The company's tax rate is 32%.
The company has 200,000 of $1000 face value bonds currently trading at 98% of par value.
The company has 1.8 million shares of preferred stock outstanding.
The company has 6.8 million shares of common stock outstanding.
Based upon the information provided above, compute the weighted average cost of capital (WACC).
Purchase this Solution
Solution Summary
The response provides steps to compute the Cost of Capital. The issues on common stocks are determined.
Solution Preview
Johnson Industries provides the following information on the company's common stocks, preferred stocks and bonds:
The company can issue a bond at yield to maturity of 7.85%.
The company pays a dividend on preferred stock of $4.76. ...
Purchase this Solution
Free BrainMass Quizzes
Lean your Process
This quiz will help you understand the basic concepts of Lean.
Operations Management
This quiz tests a student's knowledge about Operations Management
Basics of corporate finance
These questions will test you on your knowledge of finance.
Writing Business Plans
This quiz will test your understanding of how to write good business plans, the usual components of a good plan, purposes, terms, and writing style tips.
MS Word 2010-Tricky Features
These questions are based on features of the previous word versions that were easy to figure out, but now seem more hidden to me.