Assume the market value of Ford’s equity,
Assume the market value of Ford’s equity, preferred stock and debt are $7billion. $4billion and $10 billion respectively. Ford has a beta of 1.4, the market risk premium is 6% and the risk free rate of interest if 4%. Fords preferred stock pays a dividend of $3 each year and trades at a price pf $25 per share. Fords debt trades with a yield to maturity of 8.5%. what is fords Weighted Average Cost of Capital(WACC)if its tax rate is 35%?Assume Ford Motor Company is discussing new ways to recapitalize the firm and raise additional capital. Its current capital structure has a 25% weight in equity, 10% in preferred stock, and 65% in debt. The cost of equity capital is 13%, the cost of preferred stock is 9%, and the pretax cost of debt is 8%. What is the weighted average Cost of Capital (WACC) for Ford it its marginal tax rate is 40%?