What is the ( WACC) weighted average cost of capital based on the following
debt-equity ratio= 0.65
tax rate=32%
25,000 shares outstanding With a beta = 1.2
Stock price is $19 a share.
Take the average from the security market line and the dividend discount model.
current market risk premium=8.5%
Treasury-bill rate =3.6%
annual dividend =$1.10 /share (It will increase by 2% each year)
Pre-tax cost of debt =9.8%