Financial staff of Vanderheiden Inc

by | Aug 23, 2021 | Assignment

Assume that you are on the financial staff of Vanderheiden Inc., and you have collected the following data:  The yield on the company’s outstanding bonds is 7.75%; its tax rate is 40%; the next expected dividend is $0.65 a share; the dividend is expected to grow at a constant rate of 6.00% a year; the price of the stock is $15.00 per share; the flotation cost for selling new shares is F = 10%; and the target capital structure is 45% debt and 55% common equity.  What is the firm’s WACC, assuming it must issue new stock to finance its capital budget?The answer is 8.04 %  But i cant figure out howYTM = 7.75% Tax rate = 40% Dividend at year 1 (D1) = $0.65 Growth Rate (g) = 6.00% Present value of share (P0) = $15.00Floatation Cost (F) = 10.0% Weight of Debt (Wd) = 45% Weight of Equity (We) =…

Get your custom paper done at low prices


275 words/page


Double spacing


Free formatting (APA, MLA, Chicago, Harvard and others)


12 point Arial/Times New Roman font


Free title page


Free bibliography & reference


What Students Are Saying

Outstanding, thank you very much.

Undergraduate Student

English, Literature

Awesome. Will definitely use the service again.

Master's Student

Computer Science