Dixie Inc. is financing its new invention with issuance of 5 million shares of 10 years 4% coupon bond with yield to maturity 6%, 10 million shares of preferred stock with dividend $3 and return of 10%, and 900 million shares of common equity at current price of $25 per share. If its common stock has beta 1.25 and long-term risk free rate is 3% and market risk premium is 6%. What is the Weighted Average Cost of Capital given its tax rate is 40%? Ignore flotation costs.

Answer rating: 100% (QA)

To calculate the Weighted Average Cost of Capital WACC for Dixie Inc you can use the following formu... View the full answer