• 350,000 bonds outstanding with a face value of $1,000 each, all of which mature in 20 years
  • 6% coupon rate paid semiannually
  • The current market yield is 5% per year

• • Trading at 113% of face value.
• 3m preferred shares outstanding

• • $5 annual dividend

• • Currently trading at a price of $75

• 13m common shares outstanding

• • Currently trading at a price of $60

• • Beta is 1.4

• • Current risk-free rate is 2%

• • Risk premium is expected to be 9%

The marginal tax rate is 21%, while their average tax rate holds steady at 33%

What is the weight of debt?

What is the weight of preferred stock?

What is the weight of common equity?

What is the cost of debt?

What is the cost of preferred stock?

What is the cost of common equity?

What is the Weighted Average Cost of Capital (WACC)?