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Calculate the weighted average cost of capital

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Reference no: EM132099700

Question - A company has the following capital structure:

1. Target weightings: 30% debt, 20% preferred stock, 50% common equity

2. Tax rate 30%

3. The cost of debt 6.5%

4. Cost of preferred stock is 8%

5. The company's common stock have a value of $40 and a dividend of D0 = $3. The dividend is expected to grow at 6% forever.

Calculate the weighted average cost of capital?

Reference no: EM132099700

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