What is the new wacc if take the average of the capm

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Question 1: Sigma Company has the following capital structure: 45% debt, 15% preferred stock and 40% common stock. The firm's 12-year 7% annual coupon bonds is currently trading at $717.49 The firm's 10% annual dividend perpetual preferred stock with a par value of $100 is trading at $71.43. Their common stock is trading at $50. Their next dividend is expected to be $5.00. The growth rate is forecasted at 10%.. The risk-free rate is 8%, the beta of the stock is 1.5 and the market risk premium (Rm - Rf) is 12%. What is the new WACC if you take the average of the CAPM and dividend growth models to estimate the cost of equity. Assume a tax rate of 35%

Reference no: EM132889490

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