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You have been asked to calculate the weighted average cost of capital for XYZ. The company has just paid a dividend of $3 which you

You have been asked to calculate the weighted average cost of capital for XYZ. The company has just paid a dividend of $3 which you envisage will continue to grow at 3% per year in perpetuity. It is currently trading for a price of $12.5 a share and there are 10000 shares on issue. The company also has one bond on issue that pays 7% coupons semi-annually and has a face value of $100,000. It will mature in 10 years and the current market yield is 3%. What is the WACC?

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