单选题 A company has the following capital structure: Target weightings: 30% debt, 20% preferred stock, 50% common equity. Tax Rate: 35%. The firm can issue $1000 face value, 7.00% semi-annual coupon debt with a 15-year maturity for a price of $1047.46. An 8.0% dividend preferred stock issue has a value of $35 per share. The company's growth rate is estimated at 6.0%. The company's common shares have a value of $40 and a dividend in year 0 of DO = $3.00. The company's weighted average cost of capital is closest to:

A、

A. 9.84%.
B、

B. 9.28%.
C、

C. 9.21%.

【正确答案】 A

【答案解析】
Step 1 : Determine the after-tax cost of debt:
The after-tax cost of debt [ k_d ( 1 - t) ] is used to compute the weighted average cost of capital. It is the interest rate on new debt (k_d) less the tax savings due to the deductibility of interest (k_dt).
Here, we are given the inputs needed to calculate k_d: n = 15 × 2 = 30, PMT = (1000 × 0.07)/2 = 35, FV = 1000, PV = - 1047.46, CPT I = 3.25, multiply by 2 = 6.50%.
Thus, k_d(1 -t) =6.50% × (1 -0.35) =4.22%
Step 2: Determine the cost of preferred stock:
Preferred stock is a perpetuity that pays a fixed dividend (D_ps) forever. The cost of preferred stock (k_ps) = D_ps/P
where D_ps = preferred dividends. P = price.
Here, D_ps =0.08 × $35.00 = $2.80, so k_ps =D_ps/ P = $2.80/$35 =0.08, or 8.0%.
Step 3: Determine the cost of common equity:
k_ce = (D₁/ P₀) +g
where D₁ = Dividend in next year
P₀ = Current stock price
g = Dividend growth rate
Here, D₁ =D₀×(1 +g) = $3.00×( 1 +0.06) = $3.18.
k = (3.18 / 40) +0.06 =0.1395 or 13.95%.
Step 4 : Calculate WACC :
WACC = (w_d) × (k_d) + (w_ps) × (k_ps) + (w_ce) × (k_ce)
where w_d, w_ps, and w_ce are the weights used for debt, preferred stock, and common equity.
Here, WACC = (0.30 ×4.22%) + (0.20 ×8.0%) + (0.50 ×13.95%) =9.84%.
Note: Your calculation may differ slightly, depending on whether you carry all calculations in your calculator, or round to two decimals and then calculate.