Shi Importer's balance sheet shows $300 million in debt, $50 million in preferred stock, and $250 million in total common equity. Shi's tax rate is 40%, rd = 6%, rps = 5.8%, and rs = 12%. If Shi has a target capital structure of 30% debt, 5% preferred stock, and 65% common stock, what is its WACC?© BrainMass Inc. brainmass.com October 2, 2020, 2:43 am ad1c9bdddf
The WACC's formula is:
WACC = Wd*rD*(1-T) + We*rS + Wp*rPs;
Wd = weight of debt
We = weight of common ...
This solution shows how to calculate the weighted average cost of capital for the given company, Shi Importer.