XYZ company has a capital structure made up of 35 percent debt and 65 percent common...

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XYZ company has a capital structure made up of 35 percent debtand 65 percent common equity. Their bonds have a $1,000 par value,a 12 percent coupon, paid semiannually, a current maturity of 20years, and sell for $1,025. Their beta is 2.2, the risk-free rateis 3 percent, and the market risk premium is 6 percent. The companywill pay a dividend of $2.00 next year and these dividends areexpected to grow at 5.089% forever. The firm’s stock price is$18.00. The firm's marginal tax rate is 40 percent. Calculate theweighted average cost of capital (WACC).

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XYZ company has a capital structure made up of 35 percent debtand 65 percent common equity. Their bonds have a $1,000 par value,a 12 percent coupon, paid semiannually, a current maturity of 20years, and sell for $1,025. Their beta is 2.2, the risk-free rateis 3 percent, and the market risk premium is 6 percent. The companywill pay a dividend of $2.00 next year and these dividends areexpected to grow at 5.089% forever. The firm’s stock price is$18.00. The firm's marginal tax rate is 40 percent. Calculate theweighted average cost of capital (WACC).