Answer:
9?33%
Explanation:
Calculation for what is the WACC
First step is to calculate the After tax percentage
After tax percentage=8% *(1-30% tax rate)
After tax percentage=0.08 *0.7
After tax percentage=0.056*100
After tax percentage=5.6%
Second is to calculate the Total capital of all the market value
Common stock 450,000
Debt $350,000
Preferred stock $150,000
Total=$950,000
Third step is to calculate the percentage amount for common stock, debt and Preferred stock
Common stock= $450,000 x 12%
Common stock =$ 54,000
Debt =$350,000 x 5.6%
Debt =$ 19,600
Preferred stock=$150,000 x 10%
Preferred stock=$ 15,000
Hence, the total cost=$54,000+$ 19,600+$15,000
Total cost=$88,600
Last step is to calculate the WACC
WACC = $88,600 / $950,000
WACC = 9.33%
Therefore WACC will be 9.33%
