Sears has a target capital structure of 65 % common stock, 10 % preferred stock, and 25 % debt. Its cost of equity is 10%,
Sears has a target capital structure of 65 % common stock, 10 % preferred stock, and 25 % debt. Its cost of equity is 10%, the cost of preferred stock is 4 %, and the pretax cost of debt is 5%. The relevant tax rate is 22%.
What is the WACC?
What is the aftertax cost of debt?
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Authors: William O. Cleverley, James O. Cleverley, Paula H. Song
7th Edition
0763789291, 978-0763789299
