Question: 31. A company has the following target capital structure and costs: Proportion of capital structure Cost of capital Debt 30% 10% Common stock 60% 12%

31. A company has the following target capital structure and costs:

Proportion of

capital structure

Cost of

capital

Debt 30% 10%

Common stock 60% 12%

Preferred stock 10% 10%

The company’s marginal tax rate is 30%. What is the company’s weighted-average cost of capital?

a. 7.84%

b. 9.30%

c. 10.30%

d. 11.20%

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