Business, 19.07.2020 14:01 kkakk19

Daves Inc. recently hired you as a consultant to estimate the company’s Weighted Average Cost of Capital. You have obtained the following information: 1. There is no preferred equity in the company’s capital structure. 2. The company’s debt is financed through issuing corporate bond and now the yield to maturity of this bond is 8%. 3. The company’s common stock has an estimated return of 10%. 4. The tax rate is 40%. 5. The bond price is $900 per unit and there are 1 million units of bond issued. 6. The common stock is priced at $10 per share and there are 10 million stock shares outstanding. What is the firm’s WACC based on market value?

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