Given the following data for Wilson Mechanics, calculate the firm’s Weighted Average Cost of Capital.
Capital Structure: 60% debt- 40% equity
The firm has no bank loans, all debt is sourced through its one bond issuance.
Before-tax market yield (required rate of return) on its bond issuance is equal to 6%.
Tax rate is 30%.
Equity beta is 1.2.
Risk-free rate is 2%.
The expected return for the stock market is 8%.