Pfd Company has debt with a yield to maturity of 7.6%, a cost of equity of 15.1%,

Question:

Pfd Company has debt with a yield to maturity of 7.6%, a cost of equity of 15.1%, and a cost of preferred stock of 8.7%. The market values of its debt, preferred stock, and equity are $9.7 million, $3.1 million, and $14.4 million, respectively, and its tax rate is 25%. What is this firm’s after-tax WACC?

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