# Calculating WACC in the given case

What is the weighted average cost of capital if:

Tax rate is 34%

A company has 150,000 shares of common stock outstanding with a market price of $40 per share

An annual dividend of $1.50 was paid last month

Dividend growth rate is 5%

There are 5,000 bonds outstanding with a $1000 face value per bond

bonds have a 10% coupon rate

bonds mature in 6 years

bonds are currently selling at 85% face value.

https://brainmass.com/business/weighted-average-cost-of-capital/calculating-weighted-average-cost-capital-case-408682

#### Solution Preview

Please refer attached file for better clarity of functions used in MS Excel.

First let us calculate weights of different components of capital.

Market Value of common stock=Mc=40*150000=$6,000,000.00

Price od a bond=85% of face value=1000*85%=$850

Market Value of ...

#### Solution Summary

Solution calculates the Weighted Average Cost of Capital in the given case.

$2.19