Given the following information, calculate the weighted average cost for the Han

Question

Given the following information, calculate the weighted average cost for the Han Corp.  
Percent of capital structure:
Preferred stock                                                      15%
Common equity                                                     60%
Debt                                                                      25%

Additional information:
Corporate tax rate                                                  34%
Dividend, preferred                                                $9.50
Dividend, expected common                                  $1.50
Price, preferred                                                      $100.00
Growth rate                                                            9%
Bond yield                                                             6%
Price, common                                                               $75.00

Explanation / Answer

Weight Cost WACC Debt                 0.15 3.96% 0.59% Preferred                 0.60 9.50% 5.70% Equity                 0.25 11.00% 2.75% WACC 9.04%

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