Question
You were hired as a consultant to XYZ Company, whose target capital structure is 55% debt and 45% common equity. The after-tax cost of debt
You were hired as a consultant to XYZ Company, whose target capital structure is 55% debt and 45% common equity. The after-tax cost of debt is 6.00%, the cost of preferred is 7.50%, and the cost of equity is 12.00%. The firm will not be issuing any new stock. What is its WACC (after tax)?
| a. | 11.25% | |
| b. | 8.50% | |
| c. | 8.70% | |
| d. | 5.40% |
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Fundamentals of Financial Management
Authors: Eugene F. Brigham, Joel F. Houston
Concise 6th Edition
324664559, 978-0324664553
