What is the wacc for the firm

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A firm is raising funds by selling a package of equity, debt and preferred stock.

The details of the package are:

1) Equity sold for $20 million. Expected perpetual dividends to buyers is $2 million per year.

2) Preferred stock sold for $10 million. Expected perpetual dividends to buyers 6.90% per year.

3) Debt sold for $29.65, perpetual risk-less (guaranteed) coupon payments to be $1.5 million a year.

Assume no taxes and other Modigliani-Miller assumptions also hold.

What is the WACC for the firm?

Reference no: EM133117074

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