Question
Mullineaux Corporation has a target capital structure of 55 percent common stock, 10 percent preferred stock, and 35 percent debt. Its cost of equity is
Mullineaux Corporation has a target capital structure of 55 percent common stock, 10 percent preferred stock, and 35 percent debt. Its cost of equity is 9 percent, the cost of preferred stock is 4 percent, and the pre-tax cost of debt is 5 percent. The marginal tax rate is 34 percent.
a. What is the after-tax cost of debt? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) After-tax cost of debt %
b. What is the companys WACC? (Do not round intermediate calculations. Enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) WACC %
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