Question
You were hired as a consultant for a company whose target capital structure is 31% debt, 9% preferred, and 60% common equity. The before tax
You were hired as a consultant for a company whose target capital structure is 31% debt, 9% preferred, and 60% common equity. The before tax cost of debt is 11.00%, the cost of preferred is 14.00%, and the cost of retained earnings is 20.00%. The tax rate is 25%. The firm will not be issuing any new stock. What is its WACC?
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Personal Financial Planning
Authors: Lawrence J. Gitman, Michael D. Joehnk, Randy Billingsley
12th Edition
1439044473, 978-1439044476
