What is the companys weighted average cost of capital

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Reference no: EM13808452

Dobson Dairies has a capital structure, which consists of 60 percent long-term debt and 40 percent common stock. The company’s CFO has obtained the following information:

-The firm's non-callable bonds mature in 15 years have an 8.00% annual coupon, a par value of $1,000, and a market price of $1,150.00. The company’s tax rate is 35%. The company’s common stock is expected to pay a $3.00 dividend at year end, and the dividend is expected to grow at a constant rate of 7 percent a year. The common stock currently sells for $60 a share.

-Assume the firm will be able to use retained earnings to fund the equity portion of its capital budget.

What is the company’s weighted average cost of capital (WACC)?

Reference no: EM13808452

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