A firm has a capital structure with 40% debt, 50% equity, and 10% preferred stock. If the following information is given, calculate company's WACC.
YTM on firm's bond is 7.2%
Beta is 1.2; risk free rate 5%; market risk premium is 5%
Preferred stock pays dividend of $8 and sells for $100
share of debt is D = 0.4
share of preferred stock is PS= 0.10
share of equity is CS = 0.5
WACC is a calculation of a firm's cost of capital that weights each category of capital ...
WACC is depicted.