Calculate the weighted average cost of capital for a firm having a capital structure consisting of 40% debt, 10% preferred stock and 50% equity.
Assume further that debt bears interest of 8%, that preferred stock pays an $8 dividend and is priced at $100 (its par value), and that common stock sells for $55, paying a dividend of $2.20. 
Finally, assume that the expected growth rate of earnings and dividends is 9% and that the firm's effective tax rate is 34%.

Answer rating: 100% (QA)

To calculate the weighted average cost of capital WACC you need to find the cost of each component ... View the full answer