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First, here is a good example of a WACC calculation.

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I. First, here is a good example of a WACC calculation.;Debt Market Value = $100 million;Preferred stock Market Value = $50 million;Common stock Market Value = $350 million;Then the total capital base = $500 million.;Rd = 6% (assume after tax);Rp = 8%;Re = 11%;Find the weighted average cost of capital (WACC).;II. **SECOND SAMPLE PROBLEM!**;The weight of debt = 30%.;The weight of Preferred stock = 15%;The weight of Common stock = 55%;You are also given the following information;The market yield to maturity is 11%;The corporate tax rate is 34%;The expected common dividend is $3.00 per share;The price of common stock is $50 per share;The expected growth rate of common stock is 8%;The preferred dividend is $10.00 per share;The price of preferred stock is $98.00 per share;What is the weighted average cost of capital (WACC)?;Additional Requirements;Level of Detail: Show all work

 

Paper#30359 | Written in 18-Jul-2015

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