The current stock price for a company is $45 per share, and there are 7 million shares outstanding. The beta for this firms stock is 1.3, the risk-free rate is 4.4, and the expected market risk premium is 6%.

This firm also has 70,000 bonds outstanding, which pay interest semiannually. These bonds have a coupon interest rate of 7%, 20 years to maturity, a face value of $1,000, and an annual yield to maturity of 7.3%.

If the corporate tax rate is 38%, what is the Weighted Average Cost of Capital (WACC) for this firm?

Answer rating: 100% (QA)

The cost of equity is calculated using the Capital Asset Pricing Model CAPM which is calculated usin... View the full answer