AllCity, Inc., is financed 41% with debt, 9% with preferred stock, and 50% with common stock....

 

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AllCity, Inc., is financed 41% with debt, 9% with preferred stock, and 50% with common stock. Its pretax cost of debt is 5.8%, its preferred stock pays an annual dividend of $2.49 and is priced at $30. It has an equity beta of 1.17. Assume the risk-free rate is 2.4%, the market risk premium is 7.5% and AllCity's tax rate is 25%. What is its after-tax WACC? Note: Assume that the firm will always be able to utilize its full interest tax shield. The WACC is %. (Round to two decimal places.) AllCity, Inc., is financed 41% with debt, 9% with preferred stock, and 50% with common stock. Its pretax cost of debt is 5.8%, its preferred stock pays an annual dividend of $2.49 and is priced at $30. It has an equity beta of 1.17. Assume the risk-free rate is 2.4%, the market risk premium is 7.5% and AllCity's tax rate is 25%. What is its after-tax WACC? Note: Assume that the firm will always be able to utilize its full interest tax shield. The WACC is %. (Round to two decimal places.)

Answer rating: 100% (QA)

To calculate the aftertax weighted average cost of capital WACC we need to calculate the cost of eac... View the full answer