Johnny Cake Ltd. has 8 million shares of stock outstanding selling at $22 per share an an issue fo $40 million in 10 percent annual

| April 14, 2018

Johnny Cake Ltd. has 8 million shares of stock outstanding selling at $22 per share an an issue fo $40 million in 10 percent annual coupon bonds with a maturity of 17 years, selling at 94 percent of par. Assume Johnny Cake’s weighted-average tax rate is 34 percent, its next dividend is expected to be $3 per share, and all future dividends are expected to grow at 5 percent per year. indefinitely.What is its WACC? (Do not round intermediate calculations and round your final answer to 2 decimal places.)Given:Shares outstanding8,000,000Price Per Share$22.0Face Value of Outstanding Bond Issue$40,000,000Coupon Rate on bonds10%Maturity of bonds17Price of Bonds (% of par)94.0Weighted Average Tax Rate34.0%Next Expected Dividend$3.00Expected Dividend Growth Rate5.0%Complete the following analysis. (Do not hard code values in your calculations.Answer:Before Tax Cost of Equity =Before Tax Cost of Debt=Equity Weight =Debt Weight =WACC =

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