Cyber Tires would like to start a new project which will be as risky as the company's current projects. For this new project, the company plans to raise money by selling new equity, new preferred stock shares, and new debt in the following amounts: $628,000, $219,000, and $612,000. The annual costs of equity, preferred stock, and debt equal 10%, 8%, and 4%, respectively. Cyber Tires falls into 26% corporate income tax bracket.

Calculate Cyber Tires' average annual cost of running its tire business, also known as the Weighted Average Cost of Capital.

Answer rating: 100% (QA)

To calculate Cyber Tires Weighted Average Cost of Capital WACC we need to determine the proportion o... View the full answer