A firm has 5000 common shares outstanding. Its price per share is $45. On the balance sheet, total shareholder's equity is $150,000. The risk free rate is 3%, the expected return on market is 7.5% and the equity beta is 1.2. The corporate tax rate is 30%. The company has 2000 preferred shares outstanding. Its price per share is $92. The preferred shares just paid a dividend of $1.75. Dividends are paid quarterly. The company has 80 bonds outstanding. The face value is $1000 and the coupon rate is 8.4%. Coupons are paid semi annually. The price of the bond is $110. It has 40 years till maturity. What is the WACC?

Answer rating: 100% (QA)

Calculating the Weighted Average Cost of Capital WACC Heres how to calculate the WACC for the firm 1 ... View the full answer