A company has a target capital structure of 40% debt, 50% equity, and 10% preferred stock. The
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A company has a target capital structure of 40% debt, 50% equity, and 10% preferred stock. The company's before-tax cost of debt is 8%, and its tax rate is 30%. The cost of equity is 12%, and the cost of preferred stock is 9%. The company has $5 million in outstanding debt with a yield to maturity of 10%, and $2 million in outstanding preferred stock with a dividend rate of 8%. The company's net income is $3 million, and it has 1 million shares of common stock outstanding with a market price of $50 per share. Calculate the company's weighted average cost of capital (WACC).
Related Book For
Fundamentals Of Corporate Finance
ISBN: 9781265553609
13th Edition
Authors: Stephen Ross, Randolph Westerfield, Bradford Jordan
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