Chico Inc has the following financing structure 35 debt tax

Chico Inc. has the following financing structure: 35% debt tax rate is 25%, what is the WACC? (Points : 5) 10% preferred stock, and 55% common stock. After tax cost of debt is 8%, cost of preferred stock is 11% and the cost of common stock is 25%. If the ? 17.65% ? 16.95% ? 17.61% ? 13.15% ? 16.67%

Solution

WACC is 17.65% Statement showing computation Particulars Weight Cost of capital WACC Equity   55.00% 25.00% 13.75% Preferred Stock 10.00% 11.00% 1.10% debt 35.00% 8.00% 2.80% 100.00% 17.65%