Tornado Co. is considering a project that requires an initial investment of $1,708,000. The firm will raise the $1,708,000 in capital by issuing $750,000 of debt at a before-tax cost of 9.6%, $78,000 of preferred stock at a cost of 10.7%, and $880,000 of equity at a cost of 13.5%. The firm faces a tax rate of 25%. What will be the WACC for this project?

Total capital invested in project= $1,708,000

Debt = $750,000

Preferred stock= $78.000

Equity = $880,000

Wd=750.000/1.708.000

=0.4391

Wp=78,000/1,708,000

=0.0457

We= 880.000/1.708.000

=0.5151

WACC = Wd * (Rd* (1 -t)) + Wp(Rp) + We(Re)

= 0.4391(9.6% x (1 - 25%)) + 0.0457(10.7%) +0.5152(13.5%)=