Paw industries has 5 million shares of common stock outstanding with a market price of $8.00 per share. the company also has outstanding preferred stock with a market value of $10 million, and 100,000 bonds outstanding, each with face value $1,000 and selling at 96% of par value. the cost of equity is 19%, the cost of preferred is 15%, and the cost of debt is 9%. if paw's tax rate is 34%, what is the wacc?

a. 10.14%
b. 10.38%
c. 12.51%
d. 14.33%

a. 10.14%

Explanation:

WACC = wE*rE + wP*rP + wD*rD(1-tax)     whereby;

w= weight of...

r = cost of..

Find the market values;

Common equity(E) = 5,000,000* 8 = 40,000,000

Preferred stock(P) = 10,000,000

Debt (D) = 100,000 *1000 *0.96 = 96,000,000

Total value = 146,000,000

Therefore;

wE= 0.2740

wP = 0.0685

wD = 0.6575

Cost of capital;

rE = 19% or 0.19

rP = 15% or 0.15

rD = 9% or 0.09

WACC = (0.2740*0.19) + (0.0685 * 0.15) + [0.6575*0.09(1-0.34)]

WACC = 0.0521 + 0.0103 + 0.0391

WACC = 0.1015 or about 10.14%

hi,

henry is an economist and wants to understand the relationship between inflation and consumer spending habits. for his research, he needs the consumer price index for 2014 and the inflation rate. based on the prices of goods given, what will he find to be the cpi and inflation rate for 2014? assume that a consumer’s basket for three consecutive years consists of the following:

you dont privide answer choices.

answer - 15% of a inflatation rate is 15% less in cpi