Determine the weighted average cost of capital

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Reference no: EM131989369

Sound Systems (SS) has 200,000 shares of common stock outstanding at a market price of $37 a share.

SS recently paid an annual dividend in the amount of $1.20 per share the dividend growth rate is 4 percent SS also has 4.500 bonds outstanding with a face value of $1,000 per bond that are selling at 99 percent of per.

The bonds have a 6 percent coupon and a 6.7 percent yield to maturity. If the tax rate is 34 percent, what is the weighted average cost of capital?

Reference no: EM131989369

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