Acc423-Shi Importers’ balance sheet shows $300 million in debt, $50 million in preferred stock, and…

WACC

Shi Importers’ balance sheet shows $300 million in debt, $50 million in preferred stock, and $250 million in total common equity. Shi faces a 40% tax rate and the following data: rd _ 6%, rps _ 5.8%, and rs _ 12%.

If Shi has a target capital structure of 30% debt, 5% preferred stock, and 65% common stock, what is Shi’s WACC?

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