Reference no: EM131140437
Consider the data on the following data; calculate the individual costs for each security and the weighted average cost of capital (WACC). Then comment on your findings.
Percent of capital structure:
Debt ..................................................................30%
Preferred stock ....................................................15
Common equity ...................................................55
Additional information:
Bond coupon rate ...............................................13%
Bond yield to maturity .......................................11%
Dividend, expected common ............................$3.00
Dividend, preferred .........................................$10.00
Price, common .................................................$50.00
Price, preferred ................................................$98.00
Flotation cost, preferred ....................................$5.50
Growth rate ...........................................................8%
Corporate tax rate ...............................................30%