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answer show steps 26. MG corporation has a target capital structure of 45 percent common stock, 10 percent preferred stock, and 45 percent debt. Its
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26. MG corporation has a target capital structure of 45 percent common stock, 10 percent preferred stock, and 45 percent debt. Its cost of equity is 17 percent, the cost of preferred stock is 6.5 percent, and the cost of debt is 9 percent (before taxes). The relevant tax rate is 35 percent. What is MG's WACC? (a) 9.93250% "(b) 10.9325% (e) 11.9325% (d) 12.9325% 27. MM manufacturing has a target debt-equity ratio of 0.45. Its cost of equity is 18 percent and its cost of debt is 11 percent (before taxes). MM does not issue preferred stocks. If the tax rate is 34 percent, what is MM's WACC? (Hint: Debt / Common Stock Wa/We 0.45, and Wa We 1. Recall what you did in middle school to solve for Wa and Wat) (a) 12.667% (b) 13.667% (e) 14.667% (d) 15.667% Step by Step Solution
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