What is the weighted average cost of capital wacc

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Reference no: EM13338021

I. First, here is a good example of a WACC calculation.

Debt Market Value = $100 million

Preferred stock Market Value = $50 million

Common stock Market Value = $350 million

Then the total capital base = $500 million.

Rd = 6% (assume after tax)

Rp = 8%

Re = 11%

Find the weighted average cost of capital (WACC).

II. **SECOND SAMPLE PROBLEM!**

The weight of debt = 30%.

The weight of Preferred stock = 15%

The weight of Common stock = 55%

You are also given the following information:

The market yield to maturity is 11%

The corporate tax rate is 34%

The expected common dividend is $3.00 per share

The price of common stock is $50 per share

The expected growth rate of common stock is 8%

The preferred dividend is $10.00 per share

The price of preferred stock is $98.00 per share

What is the weighted average cost of capital (WACC)?

Reference no: EM13338021

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