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What is the weighted average cost of capital

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Question - Common stock (book value: P65M) is estimated at P60M and the market value of its interest bearing debt (Book value: P35M) is estimated at P40M. The average before tax yield on these liabilities is 15% per year. Income taxes are 40%. The company is expected to pay a dividend of P10 per share and the stock is selling at a price of P100 per share. The growth rate of dividend is projected to be 2.5% per year. What is the weighted average cost of capital (WACC) of the company as a whole?

Reference no: EM132940374

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