Target capital structure-debt-preferred stock-common equity

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Reference no: EM13974534

Rollins Corporation is constructing its MCC schedule. Its target capital structure is 20 percent debt, 20 percent preferred stock, and 60 percent common equity. Its before-tax cost of debt is 12%. The firm could sell, at $100, preferred stock that pays a $12 annual dividend, but flotation costs of 5 percent would be incurred. Rollins' beta is 1.2, the risk-free rate is 10%, and the market rate of return is 15%. The firm's net income is expected to be $1 million, and its dividend payout ratio is 40 percent. The firm's marginal tax rate is 40 percent. How do I find WACC? I can’t figure out the steps

Reference no: EM13974534

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