WACC problem:
A firm with a cost of equityequal to 8.5%,and a marginal tax rateof 35% ,has the following long term bonds outstanding:
| Bond |
Principal |
Yield to maturity |
| 1 |
$2,000,000 |
4.2% |
| 2 |
$1,700,000 |
3.8% |
| 3 |
$3,200,000 |
2.9% |
| 4 |
$2,900,000 |
3.4% |
|
|
|
The firm's total equityis $12,600,000
Calculate the firm's WACC.
SHOW ALL WORK .Your answer should be a percentage-formatted number with rounding to two decimals. For example, if your calculationresults in the number .062373, your answer should be written as "6.24%"