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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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