I am doing an assignment that is asking for weighted averages. I have been given the following information:$50 million in bonds which pay a 5.5% coupon; $20 million in preferred stock with a par value of $50 per share and an annual dividend of $2.75 per share; and common stock with a book value of $25 million. The cost of capital associated with common stock is 12% and the marginal tax rate for the firm is 30%.In trying to complete the WACC calculations, I have come up with the following: WACC= (E/ V x r E)+ (D/V x rD x (1-t))Where: E = market value of Equity (Preferred stock + Common Stock) 45,000,000 D= market value of Debt (bonds) 50,000,000 V = total value of the firm (E + D) 95,000,000 E/V – percentage of capital that is equity (45,000,000 / 95,000,000) .47368 D/V – percentage of capital that is debt (50,000,000 / 95,000,000) .52631 t = corporate tax rate 30%My problem comes in that I cannot figure out the cost of equity and cost of debt for this problem. I have been trying to work with the following equations:
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