A firm has $7.9 Billion debt outstanding, with a yield to maturity of 5.2% and a coupon rate of 4.2%. They have 104 million preferred shares outstanding, currently trading at $85.45. They also have 855 million common shares outstanding, currently trading at $42 and the corporate tax rate is 22%. If the return on common stock (return on equity) is 9.8% and the return on preferred stock is 7.2% what is the Weighted Average Cost of Capital (WACC)?

Answer rating: 100% (QA)

To calculate the Weighted Average Cost of Capital WACC we need to calculate the cost of each component of the capital structure and weight them by the... View the full answer