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Solve using excel spreadsheet Assume the market value of Fords' equity, preferred stock and debt are $7 billion, $4 billion and $10 billion respectively. Ford
Solve using excel spreadsheet
Assume the market value of Fords' equity, preferred stock and debt are $7 billion, $4 billion and $10 billion respectively. Ford has a beta of 1.4, the market risk premium is 6% and the risk-free rate of interest is 4%. Ford's preferred stock pays a dividend of $3 each year and trades at a price of $25 per share. Ford's debt trades with a yield to maturity of 8.5%. a. What weights should Ford use in calculating its WACC? b. What is the cost of equity? c. What is the cost of preferred equity? d. What is Ford's weighted average cost of capital if its tax rate is 35%
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