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Mullineaux Corporation has a target capital structure of 70% common stock, 5% preferred stock, and 25% debt. Its cost of equity is 11%, the cost
Mullineaux Corporation has a target capital structure of 70% common stock, 5% preferred stock, and 25% debt. Its cost of equity is 11%, the cost of the preferred stock is 5%, and the pretax cost of debt is 8%. The relevant tax rate is 35%. A) What is the Mullineauxs WACC?
B) Why doesn't the company use preferred stock financing because it costs less than debt?
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