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Question of the Week - Corporate Finance (WACC)

exam_whizexam_whiz IllinoisPosts: 68 Sr Associate
edited July 2014 in Level 1 Questions
The market values of a firm’s capital are given below: 
Total debt: $7 million 
Outstanding preferred stock: $2 million 
Outstanding common stock: $12 million 

Its before-tax cost of debt is 8%, cost of common equity is 12% and cost of preferred stock is 9%. Assuming company’s marginal tax rate is 35%, what is the weighted average cost of capital (WACC) for the firm?

Question of the Week - Corporate Finance (WACC) 29 votes

10.4%
13%
hairyfairyTannorjwdeckeriskandarmardeka 4 votes
10%
6%
nmaczTeemo 2 votes
9.5%
79%
RoyDswinn004jmsatchwelltabtombaileysurangasaShyamparth_993anjaliFarooqcraigydd3v1l_dareec_testm4driltoonervashannondailyThomasWthendry7rachelmabrahmb2arhelpa 23 votes

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