Taylor Enterprises has 12,000 bonds outstanding that have a 6% coupon rate. The bonds are selling at 98% of face value, pay interest semi-annually, and mature in 28 years. There are 400,000 shares of 9% preferred stock outstanding with a current market price of $83 a share. In addition, there are 1.40 million shares of common stock outstanding with a market price of $54 a share and a beta of 1.2. The common stock paid a total of $1.80 in dividends last year and expects to increase those dividends by 4% annually. The firm’s marginal tax rate is 34%. The overall stock market is yielding 12% and the U.S. Treasury bill rate is 4.0%.
What weight should be given to equity in the weighted average cost of capital computation?
please show the formula and then show the numbers pluged into the formula. NO EXCEL