A company has the following capital structure: 1. Target weightings: 30% debt, 20% preferred stock,50%common equity 2.
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A company has the following capital structure:
1. Target weightings: 30% debt, 20% preferred stock,50%common equity
2. Tax rate 30%
3. The cost of debt 6.5%
4. Cost of preferred stock is 8%
5. The company's common stock have a value of $40 and a dividend of D0= $3. The dividend is expected to grow at 6% forever.
Calculate the weighted average cost of capital
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