1.You have collected the following information:

a.the yield on your company's preferred stock8%

b.the yield on your company's debt10%

c.the required return on your company's common stock and internal equity12%

d.debt total$5,000,000

e.preferred stock current market value$10,000,000

f.common stock and retained earnings total value$20,000,000

Please calculate the pre-tax weighted average cost of capital (WACC) for your company.

(20 points)

2.Your company's marginal income tax rate is 40%.Please calculate the post tax WACC from the information provided in problem one.(20 points)