I need help on finding the cost of capital of the following two examples. I have the equation WACC= d/v(rd)(1-t)
+E/V (re) +D/V(rp), but I am not sure I am calculating and plugging in all three components correctly.
- CougarCo is a start-up company. Based on what you calculated on questions 2-4, the company decides to finance itself by issuing 1,000 bonds, 5,000 shares of preferred stock, and 13,000 shares of common stock.
- Assume a tax rate of 34%. Common stock is selling for $56.23. What is the firm’s the firm’s after-tax WACC?