) Given the following information for Last Question Inc. Assume the corporate tax rate is 35%, 7% market risk premium and 4.5% risk free rate.

Debt 8,000 6% coupon bonds outstanding, $1,000 par, 20 years to maturity, recently quoted at 106. The bonds make semi annual payments

Common Stock 210,000 shares outstanding, selling for $57 per share. The companies beta is 1.05 and they just paid a dividend of $1.02 which is consistent with their dividend growth target of 5%.

Preferred stock 15,000 shares of 4 percent preferred stock ($100 par) outstanding currently selling for $72 per share (5 points)







a). What is the WACC for Last Question Inc?




b) If the company did a 3-for-2 stock split of common shares, what would be the post split price and new number of shares?




c) If the company was to issue new preferred shares ($100 par), what would the dividend have to be based on current market conditions?

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Originally Posted by paraclete

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