AromaPlus, an essential oil company, plans to start a new project and will finance the project with 40% debts and the rest in common stocks. The company will issue a 10-year, 5% coupon bond that is can sell for $925.61. The company's stock is currently selling for $48 a share. It is paying $1.3 in dividends and the dividend has been growing at 9% a year and is expected to remain the same. The company's stock has a beta of 1.15 and the market rate of return is 11.3%, with a risk-free rate of 2.75%. The company's tax rate is 28%. 

What is the weighted average cost of capital (WACC) for the company?

Answer rating: 100% (QA)

Weight Cost Equity 60 1258 Debt 40 601 WACC 928 Cost of equi... View the full answer