Question
Estimate your firms Weighted Average Cost of Capital. Assume that the current risk-free rate of interest is 3.6%, the market risk premium is 5.4%, and
Estimate your firms Weighted Average Cost of Capital. Assume that the current risk-free rate of interest is 3.6%, the market risk premium is 5.4%, and the corporate tax rate is 21%. Debt: Total book value: $10 million Total market value: $18 million Coupon rate: 5% Yield to Maturity: 4% Common Stock: Total book value: $12 million Total market value: $16 million Beta = 1.11.1 Preferred Stock: Total book value: $1 million Total market value: $6.5 million Price per share: $22 Dividend per share: $1 What is your firms Weighted Average Cost of Capital (input as a raw number rounded to the 4 decimal places, i.e. if your answer is 7.1356%, input 7.1356)?
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