In: Finance
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?