Question

Seven years ago, Qualtric issued 3,750 semi-annual bonds at a par value of $1,000 and a coupon rate of 7.25%. The bonds had an original maturity of 20 years. These bonds are now trading in the open market for $1,075. The company's tax rate is 30% and its most recent dividend was $3.05. The company's dividends have been growing at 2.65% annually and they are expected to continue growing at that same rate. The price of Qualtric, Inc. stock is now trading for $45.25 per share and there are currently 140,000 shares outstanding. What is the current WACC for Qualtric, Inc.?

Answer 1

-+C28/$C$34 D28 A B C E Market value WACC (Cost сapital %xWeights) Cost % Market value structure 27 28 Cost of equity 9.57% $ 5.85% 6,335,000 0.6111 -3.05*(1+2.65%)/45.25+2.65% 29 -140000*45.25 30 31 Debt (After tax cost) 6.39% $ 2.49% 4,031,250 0.3889 RATE (13*2,72.5/2,-1075,1000,0)*2 32 3750*1075 33 Total $10,366,250 34 1.0000 35 Weighted average cost of capital (WACC) 8.33% 36

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