Determine the weighted average cost of capital

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Based on the information below, calculate the weighted average cost of capital.

Great Corporation has the following capital situation.

Debt - One thousand bonds were issued five years ago at a coupon rate of 8%. They had 25-year terms and $1,000 face values. They are now selling to yield 9%. The tax rate is 36%

Preferred stock - Two thousand shares of preferred are outstanding, each of which pays an annual dividend of $7.50. They originally sold to yield 15% of their $50 face value. They're now selling to yield 8%.

Equity - Great Corp has 125,000 shares of common stock outstanding, currently selling at $14.48 per share. Dividend expected for next year is $1.00 and the growth rate is 5%.

Reference no: EM13990904

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