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Given the following information Market value of debt = $8 million. Market value of preferred stock = $10 million Total Market Value of assets =$40
Given the following information
- Market value of debt = $8 million.
- Market value of preferred stock = $10 million
- Total Market Value of assets =$40 million
- Dividend on preferred stock = $1 million
- Tax rate 40%
- Risk free rate = 1%
- Market Risk Premium = 9%
- Beta of the firm = 1.5
- Before tax cost of debt is 7%.
A) Determine the after-tax cost of debt.
B) Determine the after tax cost of common equity.
C) Calculate the cost of preferred stock
D) Determine WACC
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