Cost of debt financing

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Big Fred's Fantastic Pizza and Pasta Incorporated's balance sheet shows $300 million in debt, $50 million in preferred stock and $250 million in total common equity. The tax rate is 40%, the cost of debt financing is 6%, the cost of preferred stock financing is 5.8% and the cost of equity financing is 12%. If Big Fred's has a target capital structure of 30% debt, 5% preferred stock, and 65% common stock, what is the WACC?

Round to 1 decimal point, if your answer was 4.1%, enter 4.1.

Reference no: EM131868802

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