Sorensen Systems Inc. is expected to pay a $2.9 dividend at year-end, the dividend is expected to grow at a constant rate of 5.8% a year,and the common stock currently sells for $58.6 a share. The before-tax cost of debt is 7.6%, and the tax rate is 31%. The target capital structure consists of 40% debt and 60% common equity. What is the company’s WACC if all the equity used is from retained earnings?

Answer rating: 100% (QA)

To calculate the Weighted Average Cost of Capital WACC we need to consider the cost of debt and the ... View the full answer