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Question 5 (10 points) Bargeron Corporation has a target capital structure of 65 percent common stock, 5 percent preferred stock, and 30 percent debt. Its
Question 5 (10 points) Bargeron Corporation has a target capital structure of 65 percent common stock, 5 percent preferred stock, and 30 percent debt. Its cost of equity is 14 percent, the cost of preferred stock is 4.5 percent, and the pretax cost of debt is 5.2 percent. The relevant tax rate is 35 percent. What is the company's WACC? 10.340% 10.885% 14.325% 11.125% Fama's Llamas has a WACC of 9 percent. The company's cost of equity is 12 percent, and its pretax cost of debt is 5 percent. The tax rate is 37 percent. What is the company's target debt-equity ratio? 0.51 0.43 0.80 0.62
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