Question
AllCity, Inc., is financed 45% with debt, 5%with preferred stock, and 50% with common stock. Its cost of debt is 6.3%, its preferred stock pays
AllCity, Inc., is financed 45% with debt, 5%with preferred stock, and 50% with common stock. Its cost of debt is 6.3%, its preferred stock pays an annual dividend of $2.52
and is priced at $33. It has an equity beta of 1.11. Assume the risk-free rate is 1.6%, the market risk premium is 7% and AllCity's tax rate is 35%.
What is its after-tax WACC?
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Analysis for Financial Management
Authors: Robert c. Higgins
8th edition
73041807, 73041803, 978-0073041803
