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Company weighted average cost of capital

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Reference no: EM131429018

Johnson Industries finances its projects with 40 percent debt, 10 percent preferred stock, and 50 percent common stock.

  • The company can issue bonds at a yield to maturity of 6.8 percent.
  • The cost of preferred stock is 7 percent.
  • The company's common stock currently sells for $29 a share.
  • The company's dividend has just paid $2.00 a share (D0 = $2.00), and is expected to grow at a constant rate of 8 percent per year.
  • Assume that the flotation cost on debt and preferred stock is zero, and no new stock will be issued.
  • The company's tax rate is 30 percent.

What is the company's weighted average cost of capital (WACC)? Express your answer in percentage (without the % sign) and round it to two decimal places.

Reference no: EM131429018

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