Question
A Corp is constructing is cost of capital schedule. The target capital structure is based on the market values of the companys outstanding securities. It
A Corp is constructing is cost of capital schedule. The target capital structure is based on the market values of the companys outstanding securities. It has 26,780 bonds outstanding with a 10.6% coupon, paid semiannually, a current maturity of 52 years, and sell for $1160 each. The firm could sell $100 preferred stock which pays a 14% annual dividend for $92 each. CP currently has 515,000 shares of preferred stock outstanding. CP just gave a dividend of $3.18, the stock has a current price of $28, and is expected to grow at 6% forever. There are currently 4,200,000 shares of common stock outstanding selling for $13.50 per share. The firms marginal tax rate is 28%. Find WAAC.
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