Question: Smith and Sons Inc. has a capital structure that consists of 40 percent debt, 10 percent preferred stock, and 50 percent common equity. The firm's

Smith and Sons Inc. has a capital structure that consists of 40 percent debt, 10 percent preferred stock, and 50 percent common equity. The firm's bond YTM is 6 percent, cost of preferred stock is 8 percent, and cost of common equity is 10 percent. The firm's marginal tax rate is 30 percent. What is this company's weighted average cost of capital?

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