Preferred Stock $ 2,000,000
Common Stock $ 8,000,000
To finance the investment, Vestor has issued 20 year bonds with a $ 1,000 par value, 6 % coupon rate and at a market price of $ 950. Preferred stock paying a $ 2.50 annual dividend was sold for $ 25 per share. Common stock of Vestor is currently selling for $ 50 per share and has a Beta of 1.2. The firm’ s tax rate is 34 %. The expected market return of the S & P 500 is 13 % and the 10-Year Treasury note is currently yielding 3.5 %.
Determinewhat discount rate( WACC) Vestor should use to evaluate the warehousing facility project.
Assess whether Vestor should make the warehouse investment.
Prepareyour analysis in a minimum of 700 words in Microsoft ® Word.
Use Microsoft ® Word tables in the presentation if you choose.
Showall calculations and analysis in the presentation.
Format your assignment consistent with APA guidelines.
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