After-tax weighted average cost of capital

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Rialto Surf Co. has an equity beta of 0.6 and a historical standard deviation of returns of 25%. Their capital is financed with 60% common equity, 10% preferred stock, and 1 30% debt. Their debt has a beta of 0. The preferred stock pays an annual preferred dividend of $2.94 per share, and has a price of $42 per share. The corporate tax rate is 21%, the expected return on the market is 10%, and the risk free rate is 3%. What is their after-tax weighted average cost of capital?

Reference no: EM132731665

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