equity 10

preferred stock 3 2.5 dividend trades at 30 rpreferred

debt 13 9.50% ytm rdebt
beta 1.7 requity
Rm 13%
Rf 3%
CAPM 25%
CALCULATE WACC: Cost of debt 9.50%
Tc 0.2
Step 1: V=D+E+P
D
E/V
P 0.25

Step 2: rpreferred 8%
rdebt 10%
requity 25%

Step 3: WACC
WACC = (D/V * (1-Tc) Rdebt) + (P/V * Rpreferred) + (E/V * Requity)
 8%
9.50%
25%

/V * Requity)