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At present, Malady Companys balance sheet shows P1 million in short-term debt, P1.4 million in long-term debt, P0.6 million in preferred stock, and P2 million
At present, Malady Companys balance sheet shows P1 million in short-term debt, P1.4 million in long-term debt, P0.6 million in preferred stock, and P2 million in common equity. Market value as determined should have been P1.8 million in short-term dept, P1.5 million in long-term debt, P0.4 million in preferred stock, and 1.3 million in common equity. Assume that the before-tax cost of dept is 5%, the cot of preferred stock is 8%, and the cost of common equity is 10%. Further, assume that the tax rate is 40%. How much is WACC?
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