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A company is planning to raise new capital for expansion. The new capital structure will consist 55% of common equity from retained earning at the
A company is planning to raise new capital for expansion. The new capital structure will consist 55% of common equity from retained earning at the cost of 13.5%, and a combination of debt at the pre-tax cost of 10% and preferred stock at the cost of 10.3%. If the marginal tax rate is 40% and the company targets the WACC at 10.34%. What is the percentage of debt and the percentage of preferred stock in this capital structure?
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