Given the following information for Pinehurst Co., calculate the WACC assuming a tax rate of 35%. (Please show all work, calculations, and formulas used and please do not use excel as my professor only wants hand written work).
Debt: 5,000 4 percent coupon bonds outstanding, $1,000 par value, 20 years to maturity, selling for 98 percent of par, the bonds make semiannual coupon payments. Floatation cost is 2% of the current market price of the bond.
Preferred Stock: 250,000 shares outstanding, selling for $10 per share and pays $0.45 per share dividends. Floatation cost is $1.
Common Stock: 150,000 shares outstanding, selling for $60 per share; most recent dividend was $3.6 per share and dividends are expected to grow at a rate of 3 percent. Floatation cost is 10% of current stock price.