Gold Diggers, Inc. has 652,000 shares of common stock, currently trading at $90.52/share. The common stock...

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Gold Diggers, Inc. has 652,000 shares of common stock, currentlytrading at $90.52/share. The common stock of Gold Diggers, Inc. isexpected to generate a dividend of $3.00/share next year, and ithas a Beta calculated at 1.95. It also has 10,000 shares ofpreferred stock, trading at $120/share. The preferred stock paysdividends of 11%. Finally, Gold Diggers, Inc. has 57,000 bondscurrently trading at $1020/bond. The coupon rate is 6%, and thebonds will mature in 8 years. Gold Diggers, Inc. expects itsdividends to grow at a rate of 12%/year, and it is in a 21% taxbracket. It estimates that the risk free rate of return is 5.5% andthe market rate of return is 12%. Calculate the WACC for GoldDiggers, Inc. Be sure to show all your work. NOTE: When calculatingthe cost of equity, compute the cost using the CAPM method and theDCF (Dividend Constant Growth Method) and average the two.
What is the numeric response?

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WACC weight of debt cost of debt weight of preferred stock cost of preferred stock weight of equity cost of equity market value of debt 57000 1020 58140000 market value of preferred stock 10000 120 1200000 market value of equity 652000 9052 59019040 total market value 58140000 1200000 59019040 118359040 See Answer

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Gold Diggers, Inc. has 652,000 shares of common stock, currentlytrading at $90.52/share. The common stock of Gold Diggers, Inc. isexpected to generate a dividend of $3.00/share next year, and ithas a Beta calculated at 1.95. It also has 10,000 shares ofpreferred stock, trading at $120/share. The preferred stock paysdividends of 11%. Finally, Gold Diggers, Inc. has 57,000 bondscurrently trading at $1020/bond. The coupon rate is 6%, and thebonds will mature in 8 years. Gold Diggers, Inc. expects itsdividends to grow at a rate of 12%/year, and it is in a 21% taxbracket. It estimates that the risk free rate of return is 5.5% andthe market rate of return is 12%. Calculate the WACC for GoldDiggers, Inc. Be sure to show all your work. NOTE: When calculatingthe cost of equity, compute the cost using the CAPM method and theDCF (Dividend Constant Growth Method) and average the two.What is the numeric response?