Question
Avery Corporation's target capital structure is 35% debt, 10% preferred, and 55% common equity. The interest rate on new debt is 6.50%, the yield on
Avery Corporation's target capital structure is 35% debt, 10% preferred, and 55% common equity. The interest rate on new debt is 6.50%, the yield on the preferred is 6.00%, the cost of common from reinvested earnings is 11.25%, and the tax rate is 25%. The firm will not be issuing any new common stock. What is Avery's WACC?
a. 8.49% b. 9.94% c. 9.19% d. 8.83% e. 9.55%
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Investments An Introduction
Authors: Herbert B Mayo
9th Edition
324561385, 978-0324561388
