WACC and required return of common stock using the CAPM.
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Calculate the weighted average cost of capital (calculate using only pre-tax items). Also calculate the required return of common stock using Capital Asset Pricing Model.
Debt: Market Rate: 9% % total capitalization: 55%
Preferred Stock: 11% % total capitalization: 10%
Common Stock: 17.50% % of total capitalization: 35%
Beta (Common Stock): 1.30
(Stock) Market return: 8.50%
T-Bill rate: 3.00%
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The expert calculates the WACC and required return of common stock using the CAPM.
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