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Sams Club has a weighted average cost of capital of 5.8%. The companys cost go...

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Finance

Sams Club has a weighted average cost of capital of 5.8%. The companys cost go equity is found to be 6% and cost of debt is 5%. Sams clubs operations are characterized by the following information.

Preferred stock outstanding= 12000 at $15 per share.

Common stock = 20,000 at $20 per share.

Bond issue =180,00 at .95 of face value.

Estimate the companys return of preferred stock, if the tax rate is 35%

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