YostCom, Inc. just paid a dividend yesterday of $2.10 on its common stock, which has a beta of 1.4, with 8 million shares outstanding. Common dividends are expected to grow at a relatively constant 5 percent annually for the foreseeable future. The firm also has 1 million shares of 4.9 percent preferred stock outstanding, which currently trade at $44.10.

YostCom's bonds currently sell for 90.1 percent of their $1,000 par value. There are 100,000 of these 5 percent coupon bonds, which pay semiannually and mature on this date in the year 2040. The expected return on the market is 10 percent and the yield on 10 year U.S. Treasury securities is 4.2 percent. The firm has a 22 percent marginal tax rate. What is the WACC?

Answer rating: 100% (QA)

To calculate the WACC for YostCom Inc we need to determine the cost of each component of ... View the full answer