Question: Find the WACC for ABC Corp using the information provided below.
Common Stock: 300,000 shares outstanding, selling for $30 a share. Beta is 0.85. Preferred Stock: 50,000 shares outstanding, selling for $65 a share. The stock pays a $5 annual dividend.
Debt: 9,000 8 percent coupon bonds outstanding selling at 115 percent of par. Current YTM is 6.5%.
Market: 8 percent market risk premium and 2.5 percent risk free rate.
Tax Rate: The corporate tax rate is 30%