Weighted average cost of capital for for CheapO Construction

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Reference no: EM132046029

1. Given the following information, calculate the weighted average cost of capital (WACC) for CheapO Construction Inc.

Percent of capital structure:

Preferred stock 10%

Common equity 40

Debt 50

Additional information:

Corporate tax rate 35%

Dividend, preferred $7.00

Dividend, expected common $1.25

Price, preferred $85.00

Growth rate 8%

Bond yield 4.5%

Flotation cost, preferred $1.75

Price, common $48.00

Reference no: EM132046029

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