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Assume the market value of Sysco’s equity, preferred stock and debt are $6 billion, $3 billion, and $13 billion,
Assume the market value of Sysco’s equity, preferred stock and debt are $6 billion, $3 billion, and $13 billion,
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respectively. Sysco has a beta of 1.7, the market risk premium is 8%, and the risk-free rate of interest is 3%. Sysco’s preferred stock pays a dividend of $2.50 each year and trades at a price of $30 per share. Sysco’s debt trades with a yield to maturity of 9.5%. What is Sysco’s weighted average cost of capital if its tax rate is 35%?
9.78%
10.24%
9.31%
11.18%
