Great Sound Music, Inc. has 20,000 shares of common stock outstanding at a market price of $26 a share. This stock was originally issued at $19 per share. The firm also has a bond issue outstanding with a total face value of $300,000 which is selling for 97 % of face value. The cost of equity is 10 % while the after-tax cost of debt is 5 %. The firm has a beta of 1.2 and a tax rate of 35 %. What is Great Sound's weighted average cost of capital?

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The Answer of Great Sound Music, Inc. has 20,000 shares of common stock outstanding at a market price of $26 a share. This stock was originally issued at $19 per share. The firm also has a bond issue outstanding with a total face value of $300,000 which is selling for 97 % of face value. The cost of equity is 10 % while the after-tax cost of debt is 5 %. The firm has a beta of 1.2 and a tax rate of 35 %. What is Great Sound's weighted average cost of capital?