THE WEIGHTED AVERAGE COST OF CAPITAL (WACC) Capital structure of the firm: Suppose the stock price is $50, there are 3 million shares of stock The firm has $25 million of preferred stock, and $75 million of debt. Assume the tax rate of 40% 1. What are the % weights of debt, pref. stock and common stock in the capital structure? 2. Using the costs of different components of capital (debt, preferred stock and equity (average) that we estimated earlier, and the weights, estimate the WACC (don't forget to make it after tax) This will be the last tab and the lecture video in this topic (cost of capital) for our class. Amount Weights% Debt Pref Common