Determine the WACC for Delta Corporation, which manufactures miniature triaxial accelerometers for space-restricted applications. The financing profile, with interest rates, is as follows: $3 million in stock sales at 8% per year, $4 million in bonds at 9%, and $6 million in retained earnings at 11% per year.
What will be an ideal response?
Total financing = 3 + 4 + 6 = $13 million
WACC = (3/13)(8%) + (4/13)(9%) + (6/13)(11%)
= 1.85% + 2.77% + 5.07%
= 9.69%
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