Q4) Emca Enterprises has a target capital structure of 40% in debt, 50% in equity (common stock), and 10% in preferred stock. The YTM on Emca's bonds is 8.00%. Its preferred stock sells for $40 per share and pays a dividend of $4.50 per share. Its equity beta is 1.30. Assume the market risk premium is 7.5%, the risk-free rate is 2.5%, and the corporate tax rate is 25%. What is Emca Enterprises' WACC?

Answer rating: 100% (QA)

To calculate Emca Enterprises weighted average cost of capital WACC we need to find the cost of each ... View the full answer