Computing the weighted average cost of capital

Reference no: EM131954827

Question: The capital structure for Purnen Corporation is given below. Calculate the weighted average cost of capital (WACC). Debt: 10%, 1, 500 bonds, 20 years to maturity, selling for 105% of par. the bonds have a $1,000 par value each and make annual payments. Common stock: 3,000,000 shares outstanding at a par value of $1, selling for $35 a share. the expected dividend is $2.8, and the growth rate is 10%. Preferred stock: 5,000 shares of 6% preferred stock outstanding, selling for $103 a share and having a par value of $100. The flotation cost is $3, and the dividend is $9. The corporate tax rate is 35%.

Reference no: EM131954827

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