As a consultant for Ford Corporation, you have collected the following information about the company’s capital structure:
Common Stock: 3,500,000 shares, Market Price = $10, Book Value = $12
Beta = 1.3
Preferred Stock 450,000 shares, Market Price = $20, dividend yield =9%
Bond 20,000 bonds, 1000 par, currently selling at 95% of par, annual coupon 6%
The risk free interest rate is 3%, the market risk premium is 9%
Ford’s tax rate is 35%
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