Find what is fords weighted average cost of capital

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Reference no: EM131535704

Financial Management Assignment

Ford Company

Capital Budgeting Problem

The market value of Fords' equity, preferred stock and debt are $7 billion, $3 billion, and $10 billion, respectively. Ford has a beta of 1.8, the market risk premium is 7%, and the risk-free rate of interest is 4%. Ford's preferred stock pays a dividend of $3.5 each year and trades at a price of $27 per share. Ford's debt trades with a yield to maturity of 9.5%. What is Ford's weighted average cost of capital if its tax rate is 30%?

Ford Company

	Market Capitalization	Weight

Equity (E)
Preferred (P)
Debt (D)

Total

Ford Company

	Weight		Cost		After-tax Marginal Weight

Equity (E)		X		=
Preferred (P)		X		=
Debt (D)		X		=

Total		X		=

Reference no: EM131535704

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