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Pfd Company has debt with a yield to maturity of 8.2%, a cost of equity of 15.1%, and a cost of preferred stock of 9.3%.
Pfd Company has debt with a yield to maturity of 8.2%, a cost of equity of 15.1%, and a cost of preferred stock of 9.3%. The market values of its debt, preferred stock, and equity are $14.6 million, $2.7 million, and $14.2 million, respectively, and its tax rate is 22%.
What is this firm's after-tax WACC?
Note: Assume that the firm will always be able to utilize its full interest tax shield.
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