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LO3 Target % in Capital Structure Component Cost (pre-tax) Component Cost (after-tax) Weighted Component Cost Debt 30.00% Preferred Stock 2.00% Equity 68.00% Tax Rate =
LO3
| Target % in Capital Structure | Component Cost (pre-tax) | Component Cost (after-tax) | Weighted Component Cost | ||
| Debt | 30.00% | ||||
| Preferred Stock | 2.00% | ||||
| Equity | 68.00% | ||||
| Tax Rate = | 35.00% | WACC = | |||
| Outstanding Bond | Preferred Stock Info | Common Stock Info | |||
| (Annual Coupons) | Preferred Divided | 2 | Current Dividend | $2.00 | |
| Time to Maturity (years) | 10 | Current Market Price | 48 | Current Price | $81.00 |
| Coupon Rate APR | 6.00% | Preferred Yield | 4.17% | Expected Growth in Dividends | 3.00% |
| Face Value | $1,000.00 | Expected Return on Equity | 5.54% | ||
| Current Market Price | $1,000.00 | ||||
| YTM | 6.00% |
Based on the information in the table, what is the WACC?
Group of answer choices
5.27%
5.02%
5.12%
4.77%
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International Financial Management
Authors: Jeff Madura
11th Edition
0538482966, 9780538482967
