Baron Corp. has a target capital structure of 60% common stock, 5% preferred stock, and 35% debt.
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Question:
Baron Corp. has a target capital structure of 60% common stock, 5% preferred stock, and 35% debt. Its cost of equity is 10%, the cost of preferred stock is 5%, and the pretax cost of debt is 6%. The relevant tax rate is 22%. A) What is the company's WACC? (2 decimal places). B) What is the aftertax cost of debt? (2 decimal places). Please use excel and explain the answer.
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