LAD Corporation has capital structure of 40% debt and 60% equity. The company wants to raise new capital. New debt will be issued at a before tax cost of 6%. The equity will be provided by internally generated funds. If the required rate of return on the firm’s stock is 10%, the firm’s marginal tax rate is 40% and the firm wants to keep the same capital structure. This Corporation’s cost of capital is------------.

Answer rating: 100% (QA)

Debt 040 Equity 060 cost of equity ... View the full answer