Question
I am having a hard time with working through Weighted Average Cost of Capital (WACC) on a project and was curious if anyone could help
I am having a hard time with working through Weighted Average Cost of Capital (WACC) on a project and was curious if anyone could help me better understand it to get through my work. (I am also doing this with the company's income statement and balance sheet if that makes a difference).
I need to find:
1. the firm's before-tax and after-tax component cost of debt.
2. estimate the firms component cost of preferred stock
3. and use CAPM, DCF and bond-yield-plus-risk-premium to estimate the component cost of common equity for the firm.
4. Calculate the firms weighted average cost of capital (WACC) using the market-based capital weights.
If anyone could please provide an IN-DEPTH response with formulas/what the variables in the formula mean and how to overall solve these 4 concepts, I would greatly appreciate it! (Thanks in advance and will provide feedback after answering.)
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