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WACC Calculation of Common Stock

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

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Solution Summary

The solution contains step-by-step calculations to determine the WACC for a firm in an Excel file. It uses the capital asset pricing model equation and the weighted average cost of capital equation.

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