WACC for this company
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With the provided information I need to figure what the WACC for this company is
Debt: book value $200Million, market value $180 Million,
Preferred Stock: book value $50Million, market value $58 Million
Common Equity: book value $450 Million market value $600Million
Some other characteristic of the company are:
Tax rate = 40%
Cost of debt=7%
Cost of common equity=10%
Cost of preferred stock=8.5%
What is the company's WACC?
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Solution Summary
WACC for this company is determined.
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Hello!
Here we need to use the formula for WACC:
WACC = (wd)(rd)(1 - T) + (we)(re) + (wp)(rp)
where
rd = cost of debt (in this case, 0.07)
re = cost of common equity (0.10)
rp = cost of preferred stock ...
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