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What is weighted average cost of capital

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Question

Easy Car Corp. is a grocery store located in the Southwest. It paid an annual dividend of ?$4.00 last year to its shareholders and plans to increase the dividend annually at the rate of 4.0?%. It currently has 2,000,000 common shares outstanding. The shares currently sell for ?$17 each. Easy Car Corp. also has 40,000 semiannual bonds outstanding with a coupon rate of 6?%, a maturity of 25 ?years, and a par value of ?$1,000. The bonds currently have a yield to maturity? (YTM) of 9%. What is the weighted average cost of capital (WACC) for Easy Car Corp. if the corporate tax rate is 20%?

Reference no: EM133496028

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