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A firm has issued long-term bonds with a total market value

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A firm has issued long-term bonds with a total market value of $50 million, and these bonds currently earn an expected return (rd) of 9 percent. Additionally, the company has 4 million shares of common stock outstanding, with each share trading for $10 (P0 = $10). At this price per share the stocks offer an expected return of 17 percent. What is the weighted average cost of capital (WACC) for this company? Assume that the firm pays no taxes (so that t = 0).

Reference no: EM13577427

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