Hatter Inc. has the following capital components and costs. Calculate Hatter's WACC. $\begin{array}{lll}
\text { Component } & \text { Value } & \text { Cost } \
\text { Debt } & 15,500 & 10 \% \
\text { Preferred Stock } & 7,500 & 12 \% \
\text { Common Equity } & 10,000 & 14 \%
\end{array}$

Question

Quizplus · Accepted Answer

The correct answer is A. The WACC is calculated as follows:WACC = (Weight of Debt * Cost of Debt) + (Weight of Preferred Stock * Cost of Preferred Stock) + (Weight of Common Equity * Cost of Common Equity)WACC = (15,500/33,000 * 10%) + (7,500/33,000 * 12%) + (10,000/33,000 * 14%)WACC = 0.47 * 10% + 0.23 * 12% + 0.30 * 14%WACC = 4.7% + 2.76% + 4.2%WACC = 11.67%

Hatter Inc A) 1167% B) 12

Hatter Inc A) 1167%
B) 12