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AllCity, Inc., is financed 45 % 45% withdebt, 12 % 12% with preferredstock, and 43 % 43% with common stock. Its cost of debt is
AllCity, Inc., is financed 45 %
45% withdebt, 12 %
12% with preferredstock, and 43 %
43% with common stock. Its cost of debt is 6.5 %
6.5%, its preferred stock pays an annual dividend of $ 2.47
$2.47 and is priced at $ 31
$31. It has an equity beta of 1.12
1.12. Assume therisk-free rate is 1.8 %
1.8%, the market risk premium is 6.8 %
6.8% andAllCity's tax rate is 35 %
35%. What is itsafter-tax WACC?
Note: Assume that the firm will always be able to utilize its full interest tax shield.
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