# Weighted Average Cost of Capital

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%

Additional Information

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.

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#### 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%

Additional Information

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]

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#### Solution Summary

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