Question #3

Given the following information, calculate the firms WACC. Assume the interest on the debt is 100% tax deductible.

Tax rate: 20%

Debt rate: 4%

Preferred stock dividend rate: 8% of $100 par value

Risk-free rate of return: 2%

Market rate of return: 11%

Stock beta: 1.3

Debt value: $20,000,000

P/S value: $5,000,000

C/S value: $25,000,000

*** what information do you need from the balance sheet and income statement in order to answer the question above? I was unable to include the financials because the system states that it is too long. Thanks,