The calculation of WACC involves calculating the weighted average of the required rates of return on debt, preferred stock, and common equity, where the weights equal the percentage of each type of financing in the firm's overall capital structure. is the symbol that represents the before-tax cost of debt in the weighted average cost of capital (WACC) equation: Mitchell Co, has $1.4 million of debt, $2.5 million of preferred stock, and $1.2 million of common equity. What would be its weight on debt? 0.27 0.24 0,49 0.44 2. An overview of a firm's cost of debt The is the interest rate that a firm pays on any new debt financing. Perpetualcold Refrigeration Company (PRC) can borrow funds at an interest rate of 11.10% for a period of four years. Its marginal federal-plus-state tax rate is 25%. PRC's after-tax cost of debt is (rounded to two decimal places). At the present time, Perpetualcold Refrigeration Company (PRC) has 15 -year noncallable bonds with a face value of $1,000 that are outstanding. These bonds have a current market price of $1,136.50 per bond, carry a coupon rate of 12%, and distribute annual coupon payments. The company incurs a federal-plus istate tax rate of 25%. If PRC wants to issue new debt, what would be a reasonable estimate for its after-tax cost of debt (rounded to two decimal places)? (Note: Round your YrM rate to two decimal place.) 6.88% 9.17% 8.798 7.64% Preferred stock is a hybrid security, because it has some charactenistics typical of debt and others typical of equity, The following table lists vanous characteristics of preferred stock. Determine which of these characteristics is consistent with debt and which is consistent with equity. Consider the case of Ferro Entergrises: At the present time, Ferro Enterprises does not have any preferred stock outstanding but is looking to include preferred stock in its capital structure in the future. Ferro has found some instututional investors that are willing to purchase its preferred stock issue provided that it pars a perpetuaf dividend of $11 per share. If the investors pay $95.70 per share for their investment, then Ferro's cost of preferred stock (rounded to four decimal places) wil! be