A firm has determined its target capital structure and it after-tax cost for each source of...

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A firm has determined its target capital structure and it after-tax cost for each source of capital. What is the firms weigh

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Answer 1

Answer #1

WACC = Weight of debt * Post tax cost of debt + Weight of common equity * Cost of common equity + Weight of preferred equity * Cost of preferred equity

WACC = 30% * 5% + 60% * 14% + 10% * 9%

WACC = 1.50% + 5.40% + 1.40%

WACC = 8.30%

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Answer 2

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