Problem:
Western Electric has 23,000 shares of common stock outstanding at a price per share of $57 and a rate of return of 14.2 percent. The firm has 6,000 shares of 7 percent preferred stock outstanding at a price of $48 a share. The preferred stock has a par value of $100. The outstanding debt has a total face value of $350,000 and currently sells for 102 percent of face. The yield-to-maturity on the debt is 8.49 percent.
Required:
Question: What is the firm's weighted average cost of capital if the tax rate is 34 percent?
- 12.69 percent
- 13.44 percent
- 14.19 percent
- 14.47 percent
- 14.92 percent
Note: Provide thorough explanation of the given question.