Thorstein Company has a targeted capital structure of 45% debt, 5% preferred stock, and 50% common equity.

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Thorstein Company has a targeted capital structure of 45% debt, 5% preferred stock, and 50% common equity. The company's cost of debt is 8.5%, preferred stock 7% and common equity 11%. They have a marginal tax rate of 25%.

Which of the following most closely approximates Thorstein's WACC?

a. 8.7%

b. 9.4%

c. 11.9%

d. 12.2%

e. 19.9%

Related Book For answer-question

Corporate Finance A Focused Approach

ISBN: 978-1305637108

6th edition

Authors: Michael C. Ehrhardt, Eugene F. Brigham

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Posted Date: Nov 09, 2023 12:15 AM

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Thorstein Company has a targeted capital structure of 45% debt, 5% preferred stock, and 50% common equity.

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Corporate Finance A Focused Approach

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