Merrill Lynch Limited has the following information and a tax rate of 30 percent. . Debt 2,000, 6 percent coupon bonds outstanding, $1,000 par value, 12 years to maturity, selling for 95 percent of par, the bonds make semiannual payments Common stock 250,000 shares outstanding, selling for $55 per share; the beta is 1.20 Preferred stock 12,000 shares of 6 percent preferred stock outstanding, currently selling for $110 per share Market 6 percent market risk premium and 4 percent risk-free rate Determine the company’s WACC by computing the following:
1. Total market value for the company
2. After-tax Cost of Debt (rounded to 3 decimal places)
3. Cost of Common Stock (rounded to 3 decimal places)
4. Cost of Preferred Stock (rounded to 3 decimal places)
5. WACC (rounded to 3 decimal places)
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