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Finding the Weighted Average Cost of Capital (WACC): You are given the following information for GoodConstruction, Inc. Assume the company's tax rate is 24%: Debt:
Finding the Weighted Average Cost of Capital (WACC):
You are given the following information for GoodConstruction, Inc. Assume the company's tax rate is 24%:
Debt: | $30,000,000 of face value of bonds outstanding with 6.0% coupon rate, 8 years to maturity, selling at 95 percent of the face value; the bonds make semiannual payments. The company has no additional debt |
Common stock: | 1,000,000 shares outstanding, selling for $65 per share; the beta is 1.5. |
Preferred stock: | 600,000 shares of preferred stock outstanding, currently selling for $50 per share, and dividend of $4.5 per share |
Market Information: | 7.5% market risk premium and 4.00% risk-free rate. |
- What are the Capital Structure Weights? (WE, WD, and WPS)
- What is the company's cost of debt (Pre-tax and After-tax)?
- What is the company's cost of common stock?
- What is the company's cost of preferred stock?
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