Calculate the WACC for the following firm:

Debt: 80,000 bonds with 5.1 percent coupon, paid semiannually, a quoted price of 114.24, 25 years to maturity, and a par value of $1,000.

Preferred Stock: 145,000 shares of 4.4 percent preferred stock with a price of $109 and a par value of $100.

Common Stock: 3,400,000 shares of common stock with a price of $84 and a beta of 1.10.

Market: The corporate tax rate is 21 percent, the market risk premium is 7 percent, and the risk-free rate is 3.1 percent.

Debt:
Number of bonds	80,000
Par value (% of par)	100
Coupon rate	5.10%
Quoted price	114.240
Settlement/Purchase Date	1/1/2000
Maturity date	1/1/2025
Coupons per year	2
Par value ($)	$ 1,000
Preferred stock:
Number of shares	145,000
Dividend	4.4%
Price	$ 109
Common stock
Number of shares	3,400,000
Price	$ 84
Beta	1.10
Market
Market risk premium	7.0%
Risk-free rate	3.1%
Tax rate	21%

A)

Debt
YTM
Aftertax cost

B)

Preferred
Dividend
Required return

C)

Equity
CAPM

D)

	Market value	Weight	Cost	Weight Times Cost
Bond
Preferred
Equity
Total			WACC =