Question
A company has a capital structure made up of bonds of $9m, common stock of $15m and preferred stock of $1m. The company operates at
A company has a capital structure made up of bonds of $9m, common stock of $15m and preferred stock of $1m. The company operates at its target capital structure. The pre-tax costs of debt are 4%, equity is 7% and preferred stock is 3%. The company pays tax at a marginal rate of 20%. What is the weighted average cost of capital?
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Introduction to Management Science
Authors: Bernard W. Taylor
11th Edition
132751917, 978-0132751919
