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12,Western Electric has 29,500 shares of common stock outstanding at a price per share of $74...

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Finance

12,Western Electric has 29,500 shares of common stockoutstanding at a price per share of $74 and a rate of return of13.25 percent. The firm has 7,050 shares of 7.30 percent preferredstock outstanding at a price of $92.50 per share. The preferredstock has a par value of $100. The outstanding debt has a totalface value of $389,000 and currently sells for 108.5 percent offace. The yield to maturity on the debt is 7.93 percent. What isthe firm's weighted average cost of capital if the tax rate is 39percent?

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4.0 Ratings (690 Votes)
Debt Face Value of Debt 389000 Market Value of Debt 10850 389000 Market Value of Debt 422065 Annual YTM 793 Beforetax Cost of Debt 793 Aftertax Cost of Debt 793 1 039 Aftertax Cost of Debt 4837 Preferred Stock Number of shares outstanding 7050    See Answer
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Transcribed Image Text

12,Western Electric has 29,500 shares of common stockoutstanding at a price per share of $74 and a rate of return of13.25 percent. The firm has 7,050 shares of 7.30 percent preferredstock outstanding at a price of $92.50 per share. The preferredstock has a par value of $100. The outstanding debt has a totalface value of $389,000 and currently sells for 108.5 percent offace. The yield to maturity on the debt is 7.93 percent. What isthe firm's weighted average cost of capital if the tax rate is 39percent?

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