You were hired as a consultant to Giambono Company, whose target capital structure is 40% debt, 15% preferred, and 45% common equity. The after-tax cost of debt is 6.00%, the cost of preferred is 7.50%, and the cost of retained earnings is 11.50%. The fir

Question

Question

You were hired as a consultant to Giambono Company, whose target capital structure is 40% debt, 15% preferred, and 45% common equity. The after-tax cost of debt is 6.00%, the cost of preferred is 7.50%, and the cost of retained earnings is 11.50%. The fir

You were hired as a consultant to Giambono Company, whose target capital structure is 40% debt, 15% preferred, and 45% common equity. The after-tax cost of debt is 6.00%, the cost of preferred is 7.50%, and the cost of retained earnings is 11.50%. The firm will not be issuing any new stock. What is its WACC?

college business finance

Add a comment Improve this question Transcribed image text

Answer 1

Answer #1

WACC=Respective cost*Respective weight

=(0.4*6)+(0.15*7.5)+(0.45*11.5)

which is equal to

=8.7%

answered by: gavin

Add a comment

Answer 2

You were hired as a consultant to Giambono Company, whose target capital structure is 40% debt, 15% preferred, and 45% common equity. The after-tax cost of debt is 6.00%, the cost of preferred is 7.50%, and the cost of retained earnings is 11.50%. The fir

Homework Answers

Add Answer to:
You were hired as a consultant to Giambono Company, whose target capital structure is 40% debt, 15% preferred, and 45% common equity. The after-tax cost of debt is 6.00%, the cost of preferred is 7.50%, and the cost of retained earnings is 11.50%. The fir

Post as a guest

Earn Coins

You were hired as a consultant to Giambono Company, whose target capital structure is 40% debt, 15% preferred, and 45%...

You were hired as a consultant to Giambono Company, whose target capital structure is 40% debt, 15% preferred, and 45% common equity

You were hired as a consultant to Giambono Company, whose target capital structure is 40%...

you were hired as a consultant to Giambono Company, whose target capital structure is 40% debt,...

You were hired as a consultant to Giambono Company, whose target capital structure is 40% debt,...

WACC caculation. Bartlett Coomany's target capital structure is 40% debt, 15% preferred,45%common equity.The after-tax cost debt...

You were hired as a consultant to Quigley Company, whose target capital structure is 40% debt,...

You were hired as a consultant to Quigley Company, whose target capital structure is 35% debt,...

You were hired as a consultant to Okland Company, whose target capital structure is 51% debt,...

You were hired as a consultant to Quigley Company, whose target capital structure is 35% debt,...

You were hired as a consultant to Giambono Company, whose target capital structure is 40% debt, 15% preferred, and 45% common equity. The after-tax cost of debt is 6.00%, the cost of preferred is 7.50%, and the cost of retained earnings is 11.50%. The fir

Homework Answers

Add Answer to: You were hired as a consultant to Giambono Company, whose target capital structure is 40% debt, 15% preferred, and 45% common equity. The after-tax cost of debt is 6.00%, the cost of preferred is 7.50%, and the cost of retained earnings is 11.50%. The fir

Post as a guest

Earn Coins

Add Answer to:
You were hired as a consultant to Giambono Company, whose target capital structure is 40% debt, 15% preferred, and 45% common equity. The after-tax cost of debt is 6.00%, the cost of preferred is 7.50%, and the cost of retained earnings is 11.50%. The fir