What is the firm weighted average cost of capital

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On its most recent balance sheet, Gray and Skye Corp. (GSC) reported $200 million of longterm debt, $50 million of preferred stock, and $500 million of common stock. On a market value basis, GSC has a target capital structure of 25% debt, 5% preferred stock, and 70% common stock. Assume GSC has a before-tax cost of debt of 5%, cost of preferred stock of 6.2%, and a cost of equity of 10.5%. GSC has a marginal tax rate of 35%. What is the firm's weighted average cost of capital?

Reference no: EM131964121

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