Your company tax rate is 35%.Your loan documents on your long term debt indicate an interest rate of 8.00%.What is the RATE (R) value you would use for this Capital Component when calculating a WACC?

Given the following information, what is the current WACC for this firm?

Component Balance Sheet Value

Short Term Debt $2,000,000

Long Term Debt $7,000,000

Preferred Stock $1,000,000

Total Common Equity $4,000,000

Interest Rate Per Short Term Loan Documents 7.00%

Interest Rate per Long Term Loan Documents 9.00%

Dividend Rate on Preferred Stock 11.00%

Common Dividends Paid in Last 12 Months 15.00%

Company Tax Rate 35%