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The Market Value of Fords' Equity,preferred Stock,and Debt Are $6

question 19

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The market value of Fords' equity,preferred stock,and debt are $6 billion,$2 billion,and $15 billion,respectively.Ford has a beta of 1.5,the market risk premium is 7%,and the risk-free rate of interest is 4%.Ford's preferred stock pays a dividend of $3 each year and trades at a price of $27 per share.Ford's debt trades with a yield to maturity of 8.5%.What is Ford's weighted average cost of capital if its tax rate is 30%?


Definitions:

ECM

Stands for Engine Control Module, a computer that controls various engine functions such as fuel injection, ignition timing, and emissions.

ECU

Stands for Engine Control Unit, a computer within a vehicle that controls various aspects of the engine's operation, including timing, air/fuel mixture, and more.

Truck System

A comprehensive arrangement of components and mechanisms which constitute the functionality of a truck, including its engine, transmission, drivetrain, and electronics.

Truck Data Bus System

A digital communication network in trucks that carries data between various electronic control units (ECUs).

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