Bargeron Corporation has a target capital structure of 61 percent common stock, 6 percent preferred stock, and
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Question:
Bargeron Corporation has a target capital structure of 61 percent common stock, 6 percent preferred stock, and 33 percent debt. Its cost of equity is 14.1 percent, the cost of preferred stock is 7.1 percent, and the pretax cost of debt is 8.8 percent. The relevant tax rate is 34 percent.
a. What is the company’s WACC? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
WACC %
b. What is the aftertax cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)
Aftertax cost of debt %
Related Book For
Fundamentals Of Corporate Finance
ISBN: 9781265553609
13th Edition
Authors: Stephen Ross, Randolph Westerfield, Bradford Jordan
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