Merrill Lynch's cost of retained earnings is 12%, cost of preferred stock is 47% and its cost of debt is 10%. the optimal capital structure is 20% common stock, 50% preferred stock and 30% debt. The firm will not be issuing any new stock and the marginal tax rate is 30%. What is the weighted average cost of capital for Merril Lynch?

 

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Cost of retained earnings common stock 12 Weight of common stock in op... View the full answer