Sigma Company has the following capital structure: 30% debt, 15% preferred stock and 55% common stock. The firm’s 15-yea

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Sigma Company has the following capital structure: 30% debt, 15%
preferred stock and 55% common stock. The firm’s 15-year 7% annual
coupon bonds is currently trading at $771.82 The firm’s 8% annual
dividend perpetual preferred stock with a par value of $100 is
trading at $71.43. Their common stock is trading at $50. Their next
dividend is expected to be $4.00. The growth rate is forecasted at
10%.. The risk-free rate is 8%, the beta of the stock is 1.4 and
the market risk premium (Rm – Rf) is 14%. a) What is the new WACC
if you take the average of the CAPM and dividend growth models to
estimate the cost of equity. Assume a tax rate of 35%