Assume the investors require the following expected returns (before investor tax):

The corporate tax rate is .34 and the investor's tax rate is .28.

a. The corporation has to earn, before corporate tax the following returns for each type ofcapital:

b. The corporation will have after tax (corporate tax) costs of capital of:

c. With.5 debt, .1 preferred stock and .4 common stock the firm will have an after tax WACC of __________.

d. An investor who buys a vertical slice of the finn's securities (the same percentage of each outstanding security) will earn an expected before investor tax return of _________.

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Debt .10 Preferred Stock .09 Common Stock .15