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What is the WACC for the following business that is 40% financed by common stock and 60% financed by debt?

What is the WACC for the following business that is 40% financed by common stock and 60% financed by debt, if the tax rate is 20%. The stock pays no dividends and is priced at $14 and is expected to rise to $16 in one year's time. The bonds are selling for 102% of par value, 3 years to maturity and have a coupon rate of 10%.

Solution Summary

Calculates WACC

$2.19