XYZ Corporation has optimal capital structure o 30% debt, 10% preferred stock, and 60% common equity....

 

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XYZ Corporation has optimal capital structure o 30% debt, 10% preferred stock, and 60% common equity. The beta of the firm's debt is 0.2, the risk- free rate of interest is 2.5%, and the market risk premium is 5.5%. Preferred stock currently sells for $35 per share and pays a dividend of $3.25. Commor stock currently sells for $28.50 and just paid a dividend (Do) of $3.00. The growth rate of the firms dividends has been and is expected to be 6%. The company's tax rate is 40%. What is the WACC (weighted average cost of capital) for this film? XYZ Corporation has optimal capital structure o 30% debt, 10% preferred stock, and 60% common equity. The beta of the firm's debt is 0.2, the risk- free rate of interest is 2.5%, and the market risk premium is 5.5%. Preferred stock currently sells for $35 per share and pays a dividend of $3.25. Commor stock currently sells for $28.50 and just paid a dividend (Do) of $3.00. The growth rate of the firms dividends has been and is expected to be 6%. The company's tax rate is 40%. What is the WACC (weighted average cost of capital) for this film?

Answer rating: 100% (QA)

SOLUTION To calculate the WACC for XYZ Corporation we need to calculate the cost of each component o... View the full answer