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Thorstein Company has a targeted capital structure of 45% debt, 5% preferred stock, and 50% common equity. The company's cost of debt is 8.5%, preferred

Thorstein Company has a targeted capital structure of 45% debt, 5% preferred stock, and 50% common equity. The company's cost of debt is 8.5%, preferred stock 7% and common equity 11%. They have a marginal tax rate of 25%. 


Which of the following most closely approximates Thorstein's WACC? 

a. 8.7% 

b. 9.4% 

c. 11.9% 

d. 12.2% 

e. 19.9%

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