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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 Preview

    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 ...

    Solution Summary

    The expert examines finding WACC in common stocks.