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You have decided to invest in a new project that requires you to raise $4,000,000. The cost of preferred stock is 10%, while the required
You have decided to invest in a new project that requires you to raise $4,000,000. The cost of preferred stock is 10%, while the required rate of return of common stock is 12%. Your bank lends money at an interest rate of 5% per year. If you raise 1/3 of capital from each source (debt, common equity, and preferred stock), how much is your WACC? Assume that your tax rate is 35%. 8.42% 8.50% 8.58% 8.67% It is not possible to answer this
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