AAA Corp. shares will pay next year a dividend of $5.00 and is expected that the dividends will grow at a rate of 4.0% annually forever. It currently has 500,000 common shares outstanding trading at $20 each. Five years ago, AAA Corp. issued 50,000 semiannual 30-year bonds with a coupon rate of 12% and a par value of $1,000. The bonds currently have a yield to maturity (YTM) of 15%. What is the weighted average cost of capital (WACC) for AAA Corp. if the corporate tax rate is 30%?

Answer rating: 100% (QA)

To calculate the Weighted Average Cost of Capital WACC for AAA Corp we need to consider the cost of ... View the full answer