Description of this paper

A company has a target capital structure of 30% de...

Description

Solution


Question

A company has a target capital structure of 30% debt, 10% preferred stock, and 60% common equity. The before-tax YTM on the company's long-term bonds is 9.5%, its cost of preferred stock is 8%, and its cost of retained earning is 12.5%. If the company's tax rate is 40%, what is the company's WACC if it doesn't have to issue new common stock?

 

Paper#1705 | Written in 18-Jul-2015

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