(Solved by Expert Tutors) Company X is considering changing its capital structure, in light>

of the tough business environment. Currently, Company X?s total capital consists of: $950 million in debt $20 million in leased assets $500 million of preferred stock $900 million in common stock $750 million in retained earnings The debt coupon is 8% and tax rate is 40% while the current preferred share price is $96.20 and the dividends per share is $9. The company's common stock is trading at $25.50, it's dividend payout this year is $1.15 the growth rate of the dividend is 8.5%. Leases are at an average cost of 8%. a. Find the weighted average cost of capital given the data above b. If Company X wants to change its capital structure (i.e., lower its WACC), what should it do?

 

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