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Business, 07.09.2021 22:20 Leonorareed5145

Rollins Corporation is estimating its WACC. Its target capital structure shows $ 400,000 debt and $ 600,000 common equity. Its bonds have 8 percent annual coupon, paid semiannually. The maturity of the bond is 20 years, and the bond sells at $900. Rollins is a constant-growth firm which just paid a dividend of $2.00, sells for $25.00 per share, and has a growth rate of 8 percent. If the firm issues new common stocks floatation costs will be 10%. The firm's marginal tax rate is 30 percent. Q3. Calculate WACC of Rollins if internal capital is enough to fund the equity portion of the budget. (6 points) Q4. Calculate WACC of Rollins if internal capital is not enough and the company has to issue new common stocks. (6 points)

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Rollins Corporation is estimating its WACC. Its target capital structure shows $ 400,000 debt and $...
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