The Market Value of Fords' Equity,preferred Stock and Debt Are

question 101

Multiple Choice

The market value of Fords' equity,preferred stock and debt are $8 billion,$4 billion and $12 billion respectively.Ford has a beta of 1.3,the market risk premium is 7% and the risk-free rate of interest is 4%.Ford's preferred stock pays a dividend of $4 each year and trades at a price of $30 per share.Ford's debt trades with a yield to maturity of 8.5%.What is Ford's weighted average cost of capital if its tax rate is 30%?

• A)8.01%
• B)8.34%
• C)9.46%
• D)9.56%

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Definitions:

Declaration Date

The specific date on which a company's board of directors announces its next dividend payment.

Record Date

The record date is a set date when a company determines its shareholders who are eligible to receive dividends or participate in corporate actions.

Payment Date

The date on which a dividend, bond interest, or other payment is actually disbursed to investors.

Dividend Reinvestment Plan

A program that allows investors to automatically reinvest their cash dividends in more shares of the issuing company.