If the risk-free rate of return is 3%, and the average return
on the market is 9%, what is the Weighted Average Cost of Capital for a company that pays a 36% marginal tax rate, has a beta of 1.6, and has a capital structure with thefollowing characteristics?
• 40 million dollar bond issue paying a 7% coupon
• 40 million dollars in Preferred Stock Issued with a ?otation cost of 1.00 per share at a price of $40 per share and paying a dividend of $2.80 annually.
• 120 million dollars in common stock