Finding WACC Common Stock
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A company's given tax rate is 35%. Debt is the following: 5,000, 9.4% coupon bonds outstanding, $1,000 par, with semi-annual payments,
Common Stock is : 165,000 shares outstanding, selling for $62 per share; beta 1.15.
Market = 6.5 % market risk premium and 5.5% risk free rate.
What is the company's WACC?
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Solution Summary
The expert examines finding WACC in common stocks.
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WACC = Proportion of debt X after tax cost of debt + Proportion of equity X cost of equity
The proportions are based on the market values.
Assuming that the market value of bonds is the same as the ...
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