Firm weighted average cost of capital-abc radars

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ABC Radars has 40,000 bonds outstanding that are selling at 1200.The bonds outstanding have 15 years to maturity and pay an annual coupon payment of 12%. The company also has 600,000 shares of 5 percent preferred stock and 3 million shares of common stock outstanding. The preferred stock sells for $45 a share. The common stock has a beta of 2 and sells for $60 a share. The U.S. Treasury bill is yielding 7 percent and the return S & P is 13 percent. The corporate tax rate is 38 percent. What is the firm's weighted average cost of capital?

Reference no: EM132681742

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