and 18 before tax The firms tax what is the WACC or a firm w

and 18% before tax? The firms tax what is the WACC or a firm with 40% debt, 20% preterred stock, and 40% common stock if the respective costs for these components are 923% before tax rate is 35%. (Hint: you are trying to take weighted average of the cost of ALL sources of money) (Points: 5) 12% after tax 9.48% O 11.16% 12.00% 15.6096

Solution

WACC = 12.00%

	Amount	weight	cost	weight*cost
equity	0.40	0.4000	18.0000%	0.0720
debt	0.40	0.4000	5.9995%	0.0240
preferred shares	0.20	0.2000	12.0000%	0.0240