You were recently hired to calculate a firm's WACC. The firm's capital structure is 40% debt,...
You were recently hired to calculate a firm's WACC. The firm's capital structure is 40% debt, 45% common stock, and 15% preferred stock. The AFTER-tax cost of debt is 3.5%, the cost of preferred stock is 6.2%, and the cost of retained earnings is 9.1%. What is the firm's WACC? Enter your answer as a decimal with four places of precision.
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Homework Answers
WACC=Respective costs*Respective weight
=(0.4*3.5)+(0.45*9.1)+(0.15*6.2)
which is equal to
=0.0643(Approx).
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You were recently hired to calculate a firm's WACC. The firm's
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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
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