Calculate the company WACC

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Question - An analyst has collected the following information regarding Christopher Co.:

The company's capital structure is 70 percent equity and 30 percent debt.

The yield to maturity on the company's bonds is 9 percent.

The company's year-end dividend is forecasted to be P0.80 a share.

The company expects that its dividend will grow at a constant rate of 9 percent a year.

The company's stock price is P25.

The company's tax rate is 40 percent.

The company anticipates that it will need to raise new common stock this year, and total flotation costs will equal 10 percent of the amount issued.

Assume the company accounts for flotation costs by adjusting the cost of capital. Given this information, calculate the company's WACC.

Reference no: EM132939746

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