What is weighted average cost of capital

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XYZ has a target capital structure of 70 percent common equity and the rest long term debt. The company's outstanding bonds have a yield to maturity of 8.8 percent. The company's common stock sells for $98.39 per share and are expected to pay a dividend of $2.68 this year. Those dividends are expected to continue to grow at a constant rate of 13.1 percent. Given its tax rate of 40 percent, what is XYZ's weighted average cost of capital? (Show your answer in decimal for to three places, e.g., 12.3% would be entered as 0.123)

Reference no: EM131899048

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