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Olde Town Manufacturing borrows money at 10%. The company is able to issue cumulative 8% preferred stock and has determined that its cost of common
Olde Town Manufacturing borrows money at 10%. The company is able to issue cumulative 8% preferred stock and has determined that its cost of common equity is 18%. The company has a 30% tax rate and pays no dividends on common stock. What is Olde Town's weighted average cost of capital if the company uses 50% debt and an even split between preferred and common stock? O 11.50% 10.00% O 9.40% 08.05%
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