The market value of Fords' equity, preferred stock and debt are $8 billion, $2 billion, and $15 billion, respectively. Ford has a beta of 1.8, the market risk premium is 7%, and the risk-free rate of...


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The market value of Fords' equity, preferred stock and debt are $8 billion, $2 billion, and $15 billion, respectively. Ford<br>has a beta of 1.8, the market risk premium is 7%, and the risk-free rate of interest is 3%. Ford's preferred stock pays a<br>dividend of $4.50 each year and trades at a price of $27 per share. Ford's debt trades with a yield to maturity of 9%.<br>What is Ford's weighted average cost of capital if its tax rate is 25%?<br>A. 11.41%<br>В. 10.89%<br>С. 12.45%<br>D. 10.38%<br>

Extracted text: The market value of Fords' equity, preferred stock and debt are $8 billion, $2 billion, and $15 billion, respectively. Ford has a beta of 1.8, the market risk premium is 7%, and the risk-free rate of interest is 3%. Ford's preferred stock pays a dividend of $4.50 each year and trades at a price of $27 per share. Ford's debt trades with a yield to maturity of 9%. What is Ford's weighted average cost of capital if its tax rate is 25%? A. 11.41% В. 10.89% С. 12.45% D. 10.38%

Jun 08, 2022
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