Answer Happy

WACC: Determine the weighted average cost of capital for a firm given the following information: (10 pts.) A corporation has 20,000 bonds outstanding with a 8% annual coupon rate, 12 years to maturity, a $1,000 face value, and a $1,100 market price. Assume semiannual coupon payments. The company's 60,000 shares of preferred stock pay a $1.50 annual dividend, and sell for $20 per share. The company's 1,200,000 shares of common stock sell for $25 per share and have a beta of 1.15. The risk-free rate is 3%, and the market return is 13%. Assuming a 21% tax rate, what is the company's WACC? WACC = (E/V) x R4+ (P/V) x Rp + (D/V) x R. (1-T)