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Common Stock (with beta 1.2) $7,000,000 Debt $3,000,000 Preferred Stock (Price $100 per share; flotation cost...

Common Stock (with beta 1.2) $7,000,000
Debt $3,000,000
Preferred Stock (Price $100 per share; flotation cost $2 per share) $2,000,000
Yield to Maturity 6%
Corporate tax rate 30%
Preferred stock dividend $4
Risk free rate 5%
Market rate of return 12%

      Required:

Given the above information, calculate the weighted average cost of capital (WACC) for Big Mart Inc.

Why it is important for Big Mart Inc. to calculate WACC?

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