Steinhafels Furniture Store, a local furniture design and sales firm, has a target capital structure of 40 percent common stock, 10 percent preferred stock, and 50 percent debt. Its cost of equity is 10 percent, the cost of preferred stock is 6 percent, and the cost of debt is 4 percent before adjusting for taxes. The relevant tax rate is 30 percent. [Chap 14]

A. What is Steinhafelss WACC?

B. If Steinhafels decided to invest in a water slide park in Baraboo, Wisconsin rather than furniture, how could it decide on an appropriate discount rate to use in evaluating water slide park investments?