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(d) Suppose Hollande Company uses debt, preferred stock and common stock to finance its capital budget and uses CAPM to compute its cost of equity.
(d) Suppose Hollande Company uses debt, preferred stock and common stock to finance its capital budget and uses CAPM to compute its cost of equity. The capital structure is 25% debt, 32% preferred stock and 43% common stock. Before tax cost of debt is 4.35% and tax rate is 21%. The cost of preferred stock is 11.25%. The Risk free rate =2.25% and market risk premium =9.57%. Hollande Company has a beta of 1.51. Write a user defined function to compute the WACC. Hint the WACC is given by: WACC=WdRd(1t)+WpsRps+WcsRcs
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