Calculate the firm wacc

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Reference no: EM133122037

Calculate the firm's WACC (weighted average cost of capital) assuming that internally generated equity will satisfy next year's common equity needs. In your solution, in addition to the calculation for WACC, please also show your supporting calculations for the following:

  • capital component weights
  • cost of debt
  • cost of preferred stock
  • cost of common equity

 You must type in both the answer and all of your work to receive credit. 

Be sure to use 4 decimal places (25.25% or 0.2525). 

Current assets

3,100

growth rate

7.50%

Property, plant & equip

3,400

coupon on new bonds

7.75%

Total assets

6,500

corporate tax rate

25.00%

 

 

dividend on preferred

8.00%

Current liabilities

1,500

price of common

$24.00

Long-term debt

1,800

price of $100 par value preferred

$75.00

Preferred stock, $100 par

500

anticipated common dividend

$1.65

Common stock, no par

1,200

flotation costs on preferred

$4.00

Retained earnings

1,500

flotation costs on common

$2.50

Total liabilities & equity

6,500

 

 

Reference no: EM133122037

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