Note: if there is no allocation to preferred stocks, you can ignore the component from preferred stocks. tax rate 9% Firm Debt Amount % weight before-tax cost after-tax cost 2,394,319,260.00 2,394,150,000.00 Equity 169,260.00 Preferred 0.00 99.99% 0.01% 4.09% 7.49% 0.00% 66551.72% 0.04 0.07 665.52 cost component after-tax cost *% weight weighted average cost of capital (WACC) 0.04 0.00 0.00 3.71% 8-1 Weighted average cost of capital What does the WACC mean? 1) The average cost of financing or hurdle rate for the business 2) The average return required by the capital providers 3) The opportunity cost for the capital providers