Question

Security Market Value % Bonds $ 9.6 million Preferred Stock $ 3.2 million Common Stock $...

Security

Market Value

%

Bonds

$ 9.6 million

Preferred Stock

$ 3.2 million

Common Stock

$ 19.2 million


What is the WACC?

  • Pre-tax cost of debt=8%
  • Tax rate=35%
  • Cost of preferred stocks= 14.33%
  • Cost of equity(common stock)=15%

WACC =

10%

12%

14%

16%
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