Question
The capital structure for WT Industries is 50% debt, 10% preferred stock, 40% common stock equity. Tax 30% Eco current debt is a loan at
The capital structure for WT Industries is 50% debt, 10% preferred stock, 40% common stock equity. Tax 30% Eco current debt is a loan at 6% stated interest rate. Ecos preferred stock pays a 5% dividend and has a $100-per-share par value. Eco does not currently pay a dividend to common stockholders. In order to track the cost of common stock the CFO uses the capital asset pricing model (CAPM). The CFO and the firms investment advisors believe that the appropriate risk-free rate is 2% and that the markets expected return equals 11%. Beta is 1.2 What is WT Industries WACC?
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