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Preston comestimating its WACCtarget capital structure is 20 percent debt20 percent stock, and percent common equity its bonds have a 12 percent coupon, paid current
Preston comestimating its WACCtarget capital structure is 20 percent debt20 percent stock, and percent common equity its bonds have a 12 percent coupon, paid current maturity of 20 yearsand sells for $1,100. The firm could sellat par$100 stock which pays 963 percent annual dividend, but flotation costs of 5 percent would incurred. Prestons beta is 12 the risk rate is 3 percent, and the market risk premium is 5 percentThe rate is 40 percentWhat is Preston's WACC
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