Capital Structure Weights - Taylor Inc. has the following abridged balance sheet:
Current Assets = $3,600
Fixed Assets = $6,400
Total Assets $10,000
Debt = $5,200
Preferred Stock = $600
Common Equity = $4,200
Total Liabilities and equity $10,000
The Market value of Taylor’s debt, preferred stock, and common equity equal its book value. Taylor's cost of debt is 8.0%, its cost of preferred stock is 7.7%, and its cost of common equity is 16.3%. If Taylor's tax rate is 40%, what is the firm's WACC?
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Current Assets = $3,600
Fixed Assets = $6,400
Total Assets $10,000
Debt = $5,200
Preferred Stock = $600
Common Equity = $4,200
Total Liabilities and equity $10,000
The Market value of Taylor’s debt, preferred stock, and common equity equal its book value. Taylor's cost of debt is 8.0%, its cost of preferred stock is 7.7%, and its cost of common equity is 16.3%. If Taylor's tax rate is 40%, what is the firm's WACC?
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