Question

P 13-15 (similar to) E Question Help All it ts financed 37% with dnt 5% with pre erred stock, and 58% with common stock lts cost of de is 5 a ts pre arra stok pays an annual dividend o 2 52 and is priced a $27 has an ฟืquity bata o 1 2 Assuma the nsk- rata 1s 1 %, the marka nsk pramium 15 nc 7% and AllCity's tax rate is 35% what is its after tax WACC? Note: Aszurme that the firrm will always be able to utilize it ful interest tax shield The WACC is )% (Round to two decimal places)

Answer 1

WACC = weight of debt * cost of debt + weight of preferred stock * cost of preferred stock + weight of common stock * cost of common stock.

Answer - WACC = 7.57% ( rounded off to 2 decimals)

Date Salutan tate 。 (0.0)* ) 25 ( 1-0-35) gh Dividend riee Yah sare Arul MiuMo Formula NAC ( 0:58 X 0.098 oY You