Radon Inc. is financing its new invention with issuance of 10 shares of 6 years 4.5% coupon bond with yield to maturity 6%, 80 shares of preferred stock with dividend $2.5 and return of 10%, and 1,700 shares of common equity at current price of $15 per share. If its common stock has beta 2 and long-term risk free rate is 3% and market risk premium is 6%. What is the Weighted Average Cost of Capital given its tax rate is 40%? Ignore floatation costs.

Answer rating: 100% (QA)

To calculate the Weighted Average Cost of Capital WACC for Radon Inc we need to calculate the cost of each component of its capital structure and then ... View the full answer