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Author Question: Utility Muffin Research Kitchen Inc. is financed with debt, preferred stock and common equity. ... (Read 30 times)

Sufayan.ah

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on: Apr 25, 2021
Utility Muffin Research Kitchen Inc. is financed with debt, preferred stock and common equity. Selected information for each of the securities is provided in the table below. Calculate the capital structure weights which would be used to calculate the weighted average cost of capital.
Long-term Debt:
$5M Face Value, Coupon Rate = 3.5%, Annual Coupons, Time to Maturity = 10 Years, YTM = 5%.
Preferred Shares:
0.5M Shares outstanding, Par Value = $10 per share, Dividend Rate (Annual) = 4%, Equivalent preferred shares yield 7%.
Common Shares:
0.5M Shares outstanding, Market price per share = $20.
◦ Wd = 0.26, Wp = 0.17, We = 0.58
◦ Wd = 0.22, Wp = 0.28, We = 0.50
◦ Wd = 0.41, Wp = 0.13, We = 0.46
◦ Wd = 0.36, Wp = 0.23, We = 0.41
◦ Wd = 0.35, Wp = 0.20, We = 0.45
Corporate Finance Online ¦ Eakins, McNally ¦ 2nd Edition
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Marked as best answer by Sufayan.ah on Apr 25, 2021

makaylafy

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Reply #1 on: Apr 25, 2021
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Sufayan.ah

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Reply 2 on: Apr 25, 2021
Wow, this really help

LVPMS

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Reply 3 on: Yesterday
Thanks for the timely response, appreciate it

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