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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.

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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. 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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