Question
Bean's Coffee is trying to determine their weighted average cost of capital (WACC). They've gathered the following information about their capital structure: Capital Source Market
Bean's Coffee is trying to determine their weighted average cost of capital (WACC). They've gathered the following information about their capital structure:
Capital Source Market Value (in millions) Book Value (in millions) Required Return
Common Stock 220 54 14%
Preferred Stock 15 8 8%
Debt 55 52 5%
Bean's Coffee also has a corporate tax rate of 30%. What is the WACC for Bean's Coffee?
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