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A company has 2,000,000 shares of outstanding common stock with a market price of $2.00 per share: Calculate the WACC.

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A company has 2,000,000 share of outstanding common stock with a market price of $2.00 per share. The company has 2,000 outstanding bonds that are selling for $1,200. The bonds mature in 15 years, have a coupon rate of 10%, and pay coupons annually. The company's beta is 1.2, the risk free rate is 5%, and the market premium is 7%. The tax rate is 34%. Calculate the WACC.

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Solution Summary

Provides steps necessary to calculate a WACC.

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