Hi

Can someone show me how to work out the WACC for this Discount Rate question?

Skye's earnings per share last year were $3.20, the common stock sells for $55.00, last year's dividends were $2.10. Analysts project that the dividend will grow at a rate of 9% per year. Skye's equity is currently worth $2,650,000. Common Stock Div 0 2.10 9.00% growth Div 1 P0 re D0 * 1 g g P0 55.00 Skye can issue 1,200 bonds with a face value of $1,000 at a coupon rate of 10%. Market rates are currently 8.5%. Bonds will have 20 years to maturity and marginal tax rate is 30%. Coupons are paid annually. Question 12 (10 marks) Calculate the cost of equity, cost of preference share, and price of long term bonds. Question 13 (5 marks) What is the WACC for Skye? Long Term Bonds Prefered stock pays a dividend of $3.30 per share and new preferred stokc could be sold at a price to net the company $30.00. The current market value of Skye's Prefered stock is $250,000. Preferred Stock re Div P0 3.30 30.00 rp Face Value Coupon Ra Coupon Payment Time to ma Market Rat 1,000 10.00% 20 8.50% Price Tax Rate 30.00% Market Values Note: For the market values of each component, you may type in the values without a formula (i.e. E25:E26 can be completed with hard-coded values). Weights After-Tax Costs Equity Preferred stock Long-term debt Total liabilities & equity WACC