University of Maryland Global Campus Market Value of Preferred Stock Report

Question Description

I’m working on a other question and need guidance to help me understand better.

Garden Tools Inc. has bonds, preferred stock, and common stocks outstanding. The number of securities outstanding, the current market price, and the required rate of return for these securities are stated in the table below. The firms tax rate is 35%.

Calculate the firm’s WACC adjusted for taxes using the market information in the table.

Round the answers to two decimal places in percentage form. (Write the percentage sign in the “units” box)

	The Number of Securities Outstanding	Selling price	The Required Rate of Return
Bonds	1,708	$1,225	10.78%
Preferred Stocks	4,860	$70.87	18.29%
Common Stocks	1,636	$120.02	15.13%

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