RM will sell 10 year bonds paying 6.9% per year at the market price of $1,062. P
ID: 2344305 • Letter: R
Question
RM will sell 10 year bonds paying 6.9% per year at the market price of $1,062. Preferred stock paying a $1.93 dividend can be sold for $25.13. Common stock for RM is currently selling for $55.52 per share and the firm paid a $2.91 dividend las year. Dividends are expected to continue to grow at a rate of 4.8% per year into the indefinite future. If the firms tax rate is 30% what discount rate should you use to evaluate the equipment purchase. RM's WACC is _____%Source of Capital Market Values
Bonds $4,500,000
Preferred Stock $2,200,000
Common Stock $5,500,000
Explanation / Answer
12.569%
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