Calculate the company's weighted average cost of capital (WACC) using all of the information below. Be sure to calculate the cost of equity using the dividend discount model and the capital asset pricing model. In addition, state the current yield for the bonds and the dividend yield for the common shares.
EQUITY INFORMATION 50 million shares outstanding; market price-$80 per share; book value- $75 per share; beta 1.15 Expected market return 14%; risk-free rate 5%; The previous dividend was $7.4109 The firm's dividend is expected to grow by 5.25% forever.
DEBT INFORMATION $1,000,000,000 in outstanding debt (face value); current quote- 08.560 coupon rate 9% paid annually; 15 years to maturity; tax rate 40%
PREFERRED STOCK 5 million shares outstanding; dividend $10; market price $111.10.