quity(We) = 0.10 , Preferred(Wp) = 0.20 , Debt(Wd) = 0.70 Cost of Equity (Ke) = 15% , Cost of Preferred (Kp) = 10% PA stock is bought for

$ 24.00

and sold for

$ 27.00

one year later, immediately after it has paid a dividend of $1.50. What is the capital gain rate for this transaction?

retax cost of debt = 8% , Tax 35% Find the Wacc? >> Find Post tax cost of debt = Pre tax rate ( 1- tax rate) = 8 ( 1 - 0.35) = 8 x 0.65 Cost of Debt (Kd)= 5.2% WACC = Ke. We + Kp .Wp + Kd.Wd = 15 x 0.10 + 10 x 0.20 + 5.2 x 0.70 = 1.5 + 2 + 3.64 WACC = 7.14 % Option B is correct