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You are going to finance a project with common stock and coupon bonds. The common stock cost will be estimated based upon the Dividend Growth
You are going to finance a project with common stock and coupon bonds. The common stock cost will be estimated based upon the Dividend Growth Model. The firm just paid a dividend of $2, with an estimated growth rate of 5% and a current price of $50. The coupon rate on the bonds is 8% and the YTM is 7%. The firm has a tax rate of 21%. If you use $650,000 of common equity and $500,000 of coupon bonds, what is the WACC of the project?
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