Reactive power generation has the following capital structure. its corporate tax rate is 40%. security market value required rate of return debt $ 30 million 4 % preferred stock 30 million 6 common stock 40 million 10 what is its wacc? (do not round intermediate calculations. enter your answer as a percent rounded to 2 decimal places.)

The WACC is 6.52%

Explanation:

The formula to compute WACC is shown below:

= Weightage of debt × cost of debt × ( 1- tax rate) + (Weightage of preferred stock) × (cost of preferred stock) + (Weightage of  common stock) × (cost of common stock)

where,  

Weighted of debt = Debt ÷ total firm

The total firm includes debt, preferred stock, and the equity which equals to

= $30 million + $30 million + $40 million

= $100 million  

So, Weighted of debt = ($30 million ÷ $100 million) =0.3

So, the weight of preferred stock = (Preferred stock ÷ total firm)

                                                     = $30 million ÷ $100 million

                                                     = 0.3  

And, the weighted of common stock = (Common stock ÷ total firm)

                                                              = $40 million ÷ $100 million

                                                              = 0.4              

Now put these values to the above formula  

So, the value would equal to

= (0.3 × 4%) × ( 1 - 40%) +  (0.3 × 6%) +  (0.4 × 10%)

= 0.72% + 1.8% + 4%

= 6.52%

hi,

henry is an economist and wants to understand the relationship between inflation and consumer spending habits. for his research, he needs the consumer price index for 2014 and the inflation rate. based on the prices of goods given, what will he find to be the cpi and inflation rate for 2014? assume that a consumer’s basket for three consecutive years consists of the following:

you dont privide answer choices.

answer - 15% of a inflatation rate is 15% less in cpi