Question: Target % in Capital Structure Component Cost (pre-tax) Component Cost (after-tax) Weighted Component Cost Debt 35.00% Preferred Stock 2.00% Equity 63.00% Tax Rate = 35.00%

Target % in Capital Structure Component Cost (pre-tax) Component Cost (after-tax) Weighted Component Cost
Debt 35.00%
Preferred Stock 2.00%
Equity 63.00%
Tax Rate = 35.00% WACC =
Outstanding Bond Preferred Stock Info Common Stock Info
(Annual Coupons) Preferred Divided 3 Current Dividend $2.00
Time to Maturity (years) 10 Current Market Price 50 Current Price $81.00
Coupon Rate APR 6.00% Preferred Yield 6.00% Expected Growth in Dividends 3.00%
Face Value $1,000.00 Expected Return on Equity 5.54%
Current Market Price $975.00
YTM 6.35%

Based on the information in the table, what is the WACC?

5.31%

5.05%

5.16%

4.80%

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