The Woodsburg Co. maintains a debt-equity ratio of.60 and has a tax rate of 35 %. The firm does not issue preferred stock. The firm's pre-tax cost of debt is 8.75 %. Woodsburg Co. has 20,000 shares of stock outstanding with a beta of.9 and a market price of $30. The current market risk premium is 7 % and the current risk-free rate is 3 %. Last month, Woodsburg Co. issued an annual dividend in the amount of $1.25 per share. Dividends are expected to grow at 2 % indefinitely. Using an average expected cost of equity, what is Woodsburg's weighted average cost of capital?

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The Answer of The Woodsburg Co. maintains a debt-equity ratio of.60 and has a tax rate of 35 %. The firm does not issue preferred stock. The firm's pre-tax cost of debt is 8.75 %. Woodsburg Co. has 20,000 shares of stock outstanding with a beta of.9 and a market price of $30. The current market risk premium is 7 % and the current risk-free rate is 3 %. Last month, Woodsburg Co. issued an annual dividend in the amount of $1.25 per share. Dividends are expected to grow at 2 % indefinitely. Using an average expected cost of equity, what is Woodsburg's weighted average cost of capital?