Xorax Industries Has 6 Million Shares of Common Stock Outstanding

question 35

Essay

Xorax Industries has 6 million shares of common stock outstanding with a market price of $18 per share.The company also has outstanding preferred stock with a market value of $15 million, and 25,000 bonds outstanding, each with face value $1,000 and selling at 95% of par value.The cost of equity is 14%, the cost of preferred is 18%, and the cost of debt is 9%.If Xorax's tax rate is 40%, what is the WACC?

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Definitions:

Seriation

Ability to order items along a dimension.

Class Inclusion

Understanding of the relationship between a whole and its parts.

Horizontal Decalage

The concept in developmental psychology indicating differences in the rate of development across various domains at the same age level.

Trampolines

Equipment consisting of a strong fabric stretched over a steel frame using coiled springs, used for recreational jumping and acrobatics.