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SolarTech Inc. is expected to pay a $2.50 dividend at year end, the dividend grows at a constant rate of 5.50% a year, and the
SolarTech Inc. is expected to pay a $2.50 dividend at year end, the dividend grows at a constant rate of 5.50% a year, and the common stock currently sells for $67.50 a share. The before-tax cost of debt is 7.50%, and the tax rate is 40%. The company's capital structure consists of 45% debt and 55% common equity. What is the companys weighted average cost of capital (WACC)?
1. | 6.02% | |
2. | 5.88% | |
3. | 7.09% | |
4. | 5.95% | |
5. | 6.24% |
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