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Author Question: Assume that you are on the financial staff of Michelson Inc., and you have collected the following ... (Read 41 times)

jany123

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Assume that you are on the financial staff of Michelson Inc., and you have collected the following data:

– The yield on the company’s outstanding bonds is 9%, and its tax rate is 38%.

– The next expected dividend is $0.76 a share, and the dividend is expected to grow at a constant rate of 7% a year.

– The price of Michelson’s stock is $18.30 per share, and the flotation cost for selling new shares is F = 11%.

– The target capital structure is 48% debt and the balance is common equity.

What is Michelson’s WACC, assuming it must issue new stock to finance its capital budget?


9.05%


8.42%


8.75%


9.03%



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Marked as best answer by jany123 on Aug 7, 2023

mamboz

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jany123

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Reply 2 on: Aug 7, 2023
Thanks for the timely response, appreciate it


raenoj

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Reply 3 on: Yesterday
Gracias!

 

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