Weighted average cost of capital of firm

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Reference no: EM131586860

What is the weighted average cost of capital (WACC) of a firm that has: a. Outstanding debt with a face value of $20 million, a coupon rate of 6%, an average maturity of 10 years, pay semiannual coupon payments, and is priced to yield 4.5% b. Has 1 million shares outstanding and is expected to pay a dividend of $2 next year. The dividend retention ratio of the company is 60%, the return on equity is expected to be 10% for the foreseeable future, and the required rate of return is 12%. Assume the firm has a tax rate of 40%.

Reference no: EM131586860

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