Question: Coca Cola has an optimal capital structure that is 60% common equity, 30% debt, and 10% preferred stock. Coca Cola's cost of equity is 10%.

Coca Cola has an optimal capital structure that is 60% common equity, 30% debt, and 10% preferred stock. Coca Cola's cost of equity is 10%. Its cost of preferred equity is 5%, and its pretax cost of debt is 6%. If the corporate tax rate is 30%, what is the weighed average cost of capital

a 8.76%

b 7.76%

c 6.76%

d 5.76%

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=+ Besides decision makers, who else would have an interest in the evaluation?

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