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8. The basic WACC equation The calculation of WACC involves calculating the weighted average of the required rates of return on debt and equity, where

8. The basic WACC equation

The calculation of WACC involves calculating the weighted average of the required rates of return on debt and equity, where the weights equal the percentage of each type of financing in the firms overall capital structure.

What is the symbol that represents the required rate of return on debt in the weighted average cost of capital (WACC) equation?

rs

rps

rstd

rd

Wyle Co. has $2.7 million of debt, $1.5 million of preferred stock, and $2.1 million of common equity. What would be its weight on preferred stock?

0.26

0.19

0.24

0.43

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