Find the weighted average cost of capital for a firm whose tax rate is 35%
Debt: 8,500 7.2% coupon bonds outstanding, $1000 par value, 25 years to maturity, selling for 118% pf par; the bonds make semi-annual payments.
Common Stock: 225,000 shares outstanding, selling for $87 per share; beta is 1.15
Preferred Stock: 15,000 shares of 4.8% preferred stock outstanding, currently selling for $48 per share
Market: 7% market risk premium and 3.1% risk-free rate