6

The Welton Mfg Company of Sioux Falls fas a balance sheet with the following capital structure: rimmon stock. Preferred stock and Debt. Additional information has been compiled by the CFO (Melissa Wheeler) to assess the weighted average cost of capital for the firm. The Beta of the firm is 1.25, common dividend growth rate of 4% for the foreseeable future. preferred stock dividend of $1,00 per year in perpetuity, the last common stock dividend paid of $0.86, market risk premium estimate of 5% and current t-bill yield of 3.5%. The existing bond issue has 7 years to maturity, has a coupon rate of 5.5%, and the coupons are paid semiannually. Melissa estimates a corporate tax rate of 21%. Using the information that has been provided to you and the computations that you have performed in the previous two questions, the WACC of the company is \%