Calculate the company weighted average cost of capital

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Scenario: Wilson Corporation (not real) has a targeted capital structure of 40% long term debt and 60% common stock. The debt is yielding 6% and the corporate tax rate is 35%. The common stock is trading at $50 per share and next year's dividend is $2.50 per share that is growing by 4% per year.

Prepare a 700-word analysis including the following:

Calculate the company's weighted average cost of capital. Use the Dividend Growth Model. Show calculations in Microsoft® Word.

The company's CEO has stated if the company increases the amount of long term debt so the capital structure will be 60% debt and 40% equity, this will lower its WACC. Explain and defend why you agree or disagree. Report how would you advise the CEO.

Format your paper consistent with APA guidelines. Discount will not apply to total words submitted below 750 words that include title page, reference page and tables.

Reference no: EM131504779

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