Question: how the calculation is done , i need clear explanation for this TB: 26) PrimaCare has a capital structure that consists of $7 million of

how the calculation is done , i need clear explanation for

how the calculation is done , i need clear explanation for this

TB: 26) PrimaCare has a capital structure that consists of $7 million of debt. $2 million preferred stock, and $11 million of common equity, based upon current market values. The firm's yield to maturity on its bonds is 7.4%, and investors require an 8% return on the firm's preferred and a 14% return on PrimaCare's common stock. If the tax rate is 35%, what is PrimaCare's WACC? A) 7.21% B) 8.12% C) 10.18% D) 12.25% Answer: C

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