Weight of debt= 37%
Cost of debt= 5.90%
tax rate= 35%
Preferred stock price= $34
Dividend= 2.46
Cost of Preferred stock = Dividend/Current price
2.46/34
0.0724 or 7.24%
Weight of Preferred= 15%
Cost of Equity = Riskfree + (Beta*Market risk Premium)
1.9%+(1.16*7.2%)
10.25%
Weight of Equity= 48%
WACC = (weight of debt * cost of debt*(1-tax rate)) + (weight of
Preferred*cost of Preferred stock)+(weight of equity * cost of
equity)
(37%*5.9%*(1-35%))+(15%*7.24%)+(48%*10.25%)
7.42%
wacc is 7.42%
Please solve, thanks. AllCity, Inc., is financed 37% with debt, 15% with preferred stock, and 48%...
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