Homework Answers
Aftertax cost of debt = Before tax cost*(1-tax
rate)
12%*(1-35%)
7.80%
Weight. Cost Weighted
cost
Debt. 23625 7.80%
1842.75
Preferred 4350 13.50%
587.25
Equity. 52275 19.20%
10036.8
Total 80250
12466.8
WACC = Weighted cost/total weight
12466.8/80250
0.1553495327 or 15.53%
So wacc is 15.53%
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The current stock price is P0 = $33.00. The last
dividend was D0 = $3.25, and it is expected to grow at a
4% constant rate. What is its cost of common equity and its WACC?
Do not round intermediate calculations. Round your answers to two
decimal...
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dividend was D0 = $3.25, and it is expected to grow at a
4% constant rate. What is its cost of common equity and its WACC?
Do not round intermediate calculations. Round your answers to two
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