Cost of Capital Problem

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  1. Use the following information to estimate the WACC for Teco. The firm has 208.9 million shares of common stock outstanding with a current price of $15.89. The most recent dividend was $0.76 and analysts estimate that dividends will grow at 3% per year. The face value of debt is 3.75 billion. The average bond has a price of 105.5 with a coupon rate of 7%. Coupons are paid semiannually and the bond matures in 6 years. TECO’s effective tax rate is 32.6%.

    Answer: 5.78%

     

    I need the steps used to slove the problem. i need the answer within hour.Thank you

    • 9 years ago
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