Calculate the weighted-average cost of capital

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Consider the following information for Federated Junkyards of America.

Debt: $78,000,000 book value outstanding. The debt is trading at 93% of book value. The yield to maturity is 8%.

Equity: 2,800,000 shares selling at $45 per share. Assume the expected rate of return on Federated’s stock is 17%.

Taxes: Federated’s marginal tax rate is Tc = .30.

Calculate the weighted-average cost of capital (WACC). (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places.)

Weighted-average cost of capital             %

Reference no: EM131556052

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