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Eli Lilly has a target capital structure of 1 5 % short - term debt, 2 5 % long - term debt, 2 0 %

Eli Lilly has a target capital structure of 15% short-term debt, 25% long-term debt, 20%
preferred equity, and the rest in common equity. The companys before tax weighted average
cost of debt is 6.5%. Their preferred stock is currently selling at $35 a share and paying a
dividend of $3. The companys common stock has a current market price of $23 per share
and the last dividend paid was $2. If dividends are expected to grow at a constant rate of 4%,
what is the companys WACC?

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