Target capital structure consists-balance is common equity

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Reference no: EM13937529

Dittmer Inc. has the following information. (1) The firm’s semi-annual bonds mature in 20 years which were issued 5 years ago, have an 8.00% coupon, a par value of $1,000, and a market price of $1,050.00. (2) The company’s tax rate is 40%. (3) The risk-free rate is 4.50%, the market risk premium is 5.50%, and the stock’s beta is 1.20. (4) The target capital structure consists of 35% debt and the balance is common equity. Calculate Dittmer’s WACC.

Reference no: EM13937529

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