A firm has determined its cost of each source of capital andoptimal capital structure, which is composed of the followingsources and target market value proportions: Long term debt has a40% target weight and costs 10% (before tax); the tax rate is 40%.Common Equity weights 50% and it costs 15% whereas preferred equityis 10% and costs 11%. The weighted average cost of capital is Groupof answer choices

10.7 percent

11 percent

15 percent

9 percent

6 percent

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