Bedford Publishing has a target capital structure of 35% debt, 10% preferred, and 55% common equity. The intere...

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Bedford Publishing has a target capital structure of 35% debt, 10% preferred, and 55% common equity. The interest rate on new

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Answer 1

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WACC = Weight of debt * Pretax cost of debt * (1 - Tax) + Weight of preferred equity * Cost of preferred equity + Weight of common equity * Cost of common equity

WACC = 35% * 6.50% * (1 - 40%) + 10% * 6.00% + 55% * 9.80%

WACC = 1.365% + 0.6% + 5.39%

WACC = 7.36%

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Answer 2

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Bedford Publishing has a target capital structure of 35% debt, 10% preferred, and 55% common equity. The intere...

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