Assume that you have collected the following data for a firm: The yield on the companys outstanding bonds is 7.75%, its tax rate is 40%, the next expected dividend is $0.65 a share, the dividend is expected to grow at a constant rate of 6.00% a year, the price of the stock is $19.00 per share, the flotation cost for selling new shares is F = 10%, and the target capital structure is 45% debt and 55% common equity. What is the firm's WACC, assuming it must issue new stock to finance its capital budget?

a. 8.68%

b. 7.93%

c. 7.78%

d. 8.76%

e. 7.48%

Answer E

GreatBig Company has a target capital structure of 40% debt, 15% preferred, and 45% common equity. The after-tax cost of debt is 6.00%, the cost of preferred is 7.50%, and the cost of retained earnings is 13.00%. The firm will not be issuing any new stock. What is its WACC?

a. 9.38%

b. 11.44%

c. 9.19%

d. 7.22%

e. 10.22%

Answer: a

I Just need to know what numbers to plug into formulas

WACC=wd (rd)(1- T)+wc (rs)=7.48%

WACC=wdrd(1- T)+wprp+wcrs =9.38%

SHow wORK