Before I ask this question I just want to clarify that I am not looking for some

Question

Before I ask this question I just want to clarify that I am not looking for someone to give me any answers. I'm trying to teach myself how to do this and I would like for someone to give me ideas on how to solve the problem so I can work it on my own. I have tried looking in my text and online but I don't even know where to start. This is my homework question:

The debt coupon is 8% and tax rate is 40%, while the current preferred share price is $96.20 and the dividend per share is $9.

The company's common stock is trading at $25.50, its dividend payout this year is $1.15, and the growth rate of the dividend is 8.5%.          

Leases are at an average cost of 8%.         

Explanation / Answer

Solution:Compuatation of weighted average cost of capital:Amt. Debt Leased assets Preferred stock Common stock Retained earnings Weight $950,000,000 $20,000,000 $500,000,000 $900,000,000 $750,000,000 30.45% 0.64% 16.03% 28.85% 24.04% $3,120,000,000 100% WACC = (Cost of debt *Weight of debt)+(Cost of lease *Weight of lease)+(Cost of equity *Weight of equity)+(Cost of preferred stock *Weight of Preferred stock)+(Cost of retained earnings *Weight of retained earnings) Please rate for remaining answer

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