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Adjusted WACC . Clark Explorers, Inc., an engineering firm, has the following capital structure: Equity Preferred Stock Debt Market Price $86.25 $223.95 $1020.47 Outstanding units

Adjusted

WACC.

Clark Explorers, Inc., an engineering firm, has the following capital structure:

Equity

Preferred Stock

Debt

Market Price

$86.25

$223.95

$1020.47

Outstanding units

140,000

6,000

6,012

Book value

$3,468,000

$1,238,000

$6,012,000

Cost of capital

15.35%

11.16%

8.1%

Using market value and book value (separately, of course), find the adjusted WACC for Clark Explorers at the following tax rates:

a.35%

b.25%

c.15%

d.5%

a.What is the market value adjusted WACC for Clark Explorers at a tax rate of 35%?

What is the book value adjusted WACC for Clark Explorers at a tax rate of 35%?

b.What is the market value adjusted WACC for Clark Explorers at a tax rate of 25%?

What is the book value adjusted WACC for Clark Explorers at a tax rate of 25%?

c.What is the market value adjusted WACC for Clark Explorers at a tax rate of 15%?

What is the book value adjusted WACC for Clark Explorers at a tax rate of 15%?

d.What is the market value adjusted WACC for Clark Explorers at a tax rate of 5%?

What is the book value adjusted WACC for Clark Explorers at a tax rate of 5%?

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