Question
Bartlett Company's target capital structure is 40% debt, 15% preferred, and 45% common equity. The after-tax cost of debt is 5.00%, the cost of preferred
Bartlett Company's target capital structure is 40% debt, 15% preferred, and 45% common equity. The after-tax cost of debt is 5.00%, the cost of preferred is 6.00%, and the cost of common using reinvested earnings is 10.00%. The firm will not be issuing any new stock. You were hired as a consultant to help determine their cost of capital. What is its WACC?
| a. | 10.12% | |
| b. | 8.53% | |
| c. | 9.83% | |
| d. | 9.26% | |
| e. | 7.40% |
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Investment Science
Authors: David G. Luenberger
2nd Edition
0199740089, 978-0199740086
