Problem
You are the financial manager of a firm and you are trying to calculate the WACC of your firm. Your firm has 20M shares outstanding and the price per share is $40. Your firm has a tradition of paying $3.60 per share dividend each year. In addition, your firm has 450,000 units of annual coupon bonds outstanding. These bonds have a coupon rate of 5%, maturity of 20 years, face value of $1,000, and the YTM of 5%. If the corporate tax rate is 25%, what is the WACC of your firm?