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Caulfield Corp. is considering expanding its production and thus needs to evaluate the cost of building another factory. Its current capital structure has a 50%
Caulfield Corp. is considering expanding its production and thus needs to evaluate the cost of building another factory. Its current capital structure has a 50% weight in debt, 30% in ordinary equity, and 20% in preferred stock. The cost of ordinary equity is 20%, the cost of preferred stock is 15%, and the pretax cost of debt is 10%, and its marginal tax rate is 40%. What is the firms weighted average cost of capital in percentage terms?
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