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WACC for a firm in the 35% corporate tax bracket

What is the weighted average cost of capital for a firm in the 35% corporate tax bracket, with the following:

Financing Amount Rate of Interest for each.

Equity $ 1,150,000 11.57%

Debt $ 780,000 6.40%

Preferred $ 325,000 9.35%

Please show all work.

Thank you,

Don

Solution Preview

The weighted average cost of capital is given as
proportion of debt X cost of debt + proportion of preferred stock X cost of preferred stock + proportion of equity X cost of ...

Solution Summary

The solution explains how to calculate the weighted average cost of capital.

$2.19