ABC firm has a target capital structure calling for 30% debt, 10% preferred stock, and remaining common stock. It’s before tax cost of debt, 11%, its cost of preferred stock is 8.2% and cost of equity is 11.6%. Its marginal tax rate is 40%, and all of its new equity will come from reinvested earnings. Calculate WACC for ABC firm?

Answer rating: 100% (QA)

Answer The weighted average cost of capital WACC for ABC firm is 10... View the full answer