Question
Hello! Please provide a step by step solution (all steps please) for this WACC calculation. Each question will need to be answered please!! Our WACC
Hello! Please provide a step by step solution (all steps please) for this WACC calculation. Each question will need to be answered please!!
Our WACC formula is wd*rd(1-T)+wp*rp+ws*rs
Black Diamond, Inc., a manufacturer of carbon and graphite products for the metal production, electronics, aerospace and transportation industries, is considering several funding alternatives for an investment project. To finance the project, the company can sell 1,000 15-year bonds with a $1,000 face value, 7% coupon rate. The bonds are sold at $950. To calculate the cost of common stock, the company uses the dividend discount model. The firm just paid a dividend of $3 per common share. The company expects this dividend to grow at a constant rate of 3% per year indefinitely. The company plans to sell 10,000 shares at a price of $50 per share. The company's tax rate is 40%.
a) Calculate the company's after-tax cost of long-term debt
b) Calculate the company's cost of common stock
d) Calculate the company's weighted average cost of capital
Thank you so much!
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