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ABC's Company's target capital structure is 40% debt, 15% preferred, and 45% common equity. The after-tax cost of debt is 6%, the cost of preferred
ABC's Company's target capital structure is 40% debt, 15% preferred, and 45% common equity. The after-tax cost of debt is 6%, the cost of preferred is 7.50%, and the cost of common using reinvested earnings is 12.75%. The tax is 40%. The firm will not be issuing any new stock. You were hired as a consultant to help determine their cost of capital. What is its WACC?
9.26%
8.75%
8.30%
10.12%
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