Calculate the weighted average cost of capital. Great corporation has the following situation.
Debt: One thousand bonds were issued five years ago at a coupon rate of 8%.
They had 25-year terms and $1,000 face values. They are now selling to yield 9%.
The tax rate is 36%.
Preferred stock: Two thousand shares of preferred are outstanding, each of which pays an annual dividend of $7.50.
They originally sold to yield 15% of their $50 face value.
They’re now selling to yield 8%.
Equity: Great Corp has 125,000 shares of common stock outstanding, currently selling at $14.48 per share.
Dividend expected for next year is $1.00 and the growth rate is 5%