Weighted average cost of capital

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Weighted Average Cost of Capital The Global Advertising Co. has a tax rate of 36%. The company can raise debt at a 9% interest rate. Global's stock price is $12.71 per share and it recently issued a dividend of $0.85, which is expected to grow at a constant rate of 5%. Global's investment bankers have informed the company that the flotation cost incurred for issuing new common stock will be 10 percent of the gross issuance proceeds. Global plans to finance all capital expenditures with 30% debt and 70% equity. Determine the firm's WACC, assuming the firm has sufficient retained earnings to fund the equity portion of its capital budget. Follow the guidelines used in this course for precision of intermediate values. Present your answer as a percentage, rounded-off to one decimal place ( i.e. 12.3 ).

Reference no: EM131192523

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