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Problem:

Silverstone and Moore has 10,000 shares of common stock outstanding at a price per share of $46 and a rate of return of 14%. The firm has 5,000 shares of preferred stock outstanding at a price of $58 a share and a rate of return of 12.07%. The outstanding debt has a total face value of $200,000 and a market price equal to 98% of face value. The yield-to-maturity on the debt is 8.03%.

Required:

Question: What is the firm's weighted average cost of capital if the tax rate is 34%?

a. 12.65%

b. 11.61%

c. 9.99%

d. 12.12%

e. 8.62%

Note: Show supporting computations in good form.

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Accounting Basics, Accounting

Category:- Accounting Basics
Reference No.:- M91172380

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