Homework Answers
| Total value=(Number of securities outstanding*Selling price) | After-tax return | |
| Bonds | (1531*1216)=1861696 |
10.36*(1-tax rate) =10.36*(1-0.35) =6.734% |
| Preferred stock | (5148*53.48)=275315.04 | 15.16% |
| Common stock | (1318*102.64)=135279.52 | 13.46% |
| Total value=$2272290.56 |
WACC=Respective return*Respective weight
=(1861696/2272290.56*6.734)+(275315.04/2272290.56*15.16)+(135279.52/2272290.56*13.46)
which is equal to
=8.16%(Approx).
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