What discount rate or wacc should they use

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If a firm is considering a new investment, that will generate an internal rate of return of 11.5%, with $10,000,000 in bonds, $2,000,000 in preferred stocks and $8,000,000 in common stock and to finance the investment the firm issues 20 year bonds with a $1,000 par value, 6% coupon rate and a market price of $950. What discount rate or WACC should they use ? Preferred stock is paying a $2.50 annual dividend and sold for 25.00 per share. Common stock selling for 50.00 per share with a Beta of 1.2 Tax rate: 34% ....... Expected market return of the S&P 500 is 13%........10 year treasury note yeilding 3.5%

Reference no: EM131502727

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