What is the firms overall cost of capital

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Gil Corp. considers the following capital optimal: 40% debt, 50% equity, and 10%prefered stock. Guls stock currently sells for $50 per share. Guls beta is 1.8. The risk free rate is 9% and the expected rate of return is 13%. Guls bond currently sells for $1150. The bond carries an annual coupon payment of 12% of face value which is paid in 2 semiannual payment. The bond will mature in 15 years and it's face value is $1000. The bond annual yield to maturity is 10.04%. The firms marginal tax is 40 percent. The guls required return on the prefered stock is 13%. What is the firms overall cost of capital (WACC)?

Reference no: EM131082516

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