Utilizing the Weighted Average Cost of Capital (WACC) is a powerful concept in selecting and evaluating investments. The following company has disclosed the capital structure (debt + equity) of its company. Assume a 40% effective tax rate.
Book Value Pretax Rate of Return/ Market Value Expected Return
Accounts Payable $5,000,000 0% $5,000,000
Notes Payable $ 2,000,000 7% $ 2,000,000
Bonds $18,000,000 12% $16,500,000
Common Stock $50,000,000 20% $ 75,000,000
Calculate the WACC for this company (show all work utilizing a table approach)