Question: 17 Given the following data, compute the weighted average cost of capital (WACC). Components of capital structure After Tax Cost Debt $65 million 6.5% Preferred

17

Given the following data, compute the weighted average cost of capital (WACC).

Components of capital structure After Tax Cost

Debt $65 million 6.5%

Preferred Stock 35 million 10.5%

Common Equity 60 million 12.75%

Total 160 million

If the return on assets of the corporation is 13% on an annual basis, calculate its profitability and economic value added, EVA.

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