Garden Tools inc. has bonds, preferred stock and common stocks outstanding The n
ID: 2798831 • Letter: G
Question
Garden Tools inc. has bonds, preferred stock and common stocks outstanding The number of securities outstanding, the current market price, and the required rate of return for these securities are stated in the tabte below. The firm's tax rate is 35%. Catculate the firm's WACC adjusted for taxes using the market information in the tabte Round the answers to two decimai places in percentege form tittrite the percentage sigthe box The Number of Securities Outstanding Selling price The Required Rate of Return Bonde $984 10.75% UnitE save Page 3 of šExplanation / Answer
WACC=Respective returns*Respective weights
=(1659024/2,071,326.17*5.2585)+(272122.97/2,071,326.17*19.08)+(140179.2/2,071,326.17*10.75)
which is equal to
=7.45%(Approx).
Total value After tax required rate of return Bonds (1686*984)=$1659024 8.09(1-0.35)=5.2585% Preferred stock (4067*66.91)=$272122.97 19.08% Common stock (1344*104.3)=$140179.2 10.75% Total=$2,071,326.17Related Questions
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