Regarding current asset investment choices

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1. Shi Importers' balance sheet shows $300 million in debt, $50 million in preferred stock, and $250 million in total common equity. Shi's tax rate is 40%, rd = 8%, rps = 9%, and rs = 10%. If Shi has a target capital structure of 30% debt, 5% preferred stock, and 65% common stock, what is its WACC? Round your answer to two decimal places.

2. Tom taylor wants to accumulate wealth but he has told his financial planner that he is risk averse. What should the financial planner advise tom to do regarding his current asset investment choices considering his risk tolerance and his goal of accumulating wealth?

Reference no: EM132031934

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