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# Weighted Average Cost of Capital

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I need help with this assignment I am really lost.

With the following data, calculate the individual cost for each security and the overall WACC.

Percent of capital structure:

Debt 35%
Preferred stock 10%
Common equity 55%

Bond coupon rate 11%
Bond Yield to maturity 9%
Dividend, expected common \$2.50
Dividend, preferred \$7.00
Price, common \$45
Price preferred \$100
Flotation costs, preferred \$5.00
Growth rate 8%
Corporate tax rate 35%

Please use the WACC formula to calculate weighted Average Cost of Capital Calculation, show me step by step so I can understand.

#### Solution Preview

With the following data, calculate the individual cost for each security and the overall WACC.

Percent of capital structure:

Debt 35%
Preferred stock 10%
Common equity 55%

Bond coupon rate 11%
Bond Yield to maturity 9%
Dividend, expected common \$2.50
Dividend, preferred \$7.00
Price, common \$45
Price preferred \$100
Flotation costs, preferred \$5.00
Growth rate 8%
Corporate tax rate 35%

Weighted Average Cost of Capital Calculation
WACC = [D x r debt x (1-Tc)]+[p x r preferred]+[e x r equity]
...

#### Solution Summary

This solution is comprised of a detailed explanation to calculate WACC for the company.

\$2.19