Based on the information below, calculate the weighted average cost of capital.
Great Corporation has the following capital situation.
Debt: One thousand bonds were issued five years ago at a coupon rate
of 10%. They had 25-year terms and $1,000 face values. They are now
selling to yield 9%. The tax rate is 40%
Preferred stock: Two
thousand shares of preferred are outstanding, each of which pays an
annual dividend of $7.50. They originally sold to yield 15% of their
$50 face value. They're now selling to yield 10%.
Corp has 120,000 shares of common stock outstanding, currently selling
at $14.48 per share. The risk free rate is 3%, market rate of return is
10% and the Beta is 1.2.