What is the wacc for company b

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Reference no: EM132939310

You are evaluating Company B and know the following:

O2M OB,MrMrRF

= .0484

= .08954

= .12

= .03

The marginal corporate tax rate is 35%. The YTM (yield to maturity) on the debt of Company B (incorporating floatation costs) is 9.3%. Company B issued preferred stock for $520.00 per share net of flotation costs. The preferred pays an annual dividend of $59.28 per share. The book value of the debt is $695,800,000 and you decide that this is close to the market value of the debt. The market value of all the preferred shares is $98,000,000 and the market value of the common stock is $186,200,000. In all of your calculations please round to four decimal places.

Problem 1: What is the WACC (weighted average cost of capital) for Company B?

Reference no: EM132939310

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