Target capital structure 40 debt 10 preferred and 50 common, Ask an Expert

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You were hired as a consultant to Locke Company, and you were provided with the following data: Target capital structure: 40% debt, 10% preferred, and 50% common equity. The interest rate on new debt is 7.5%, the yield on the preferred is 7.0%, the cost of retained earnings is 11.50%, and the tax rate is 40%. The firm will not be issuing any new stock. What is the firm's WACC?

8.25%

8.38%

8.49%

8.61%

8.76%

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Basic Finance, Finance

Category:- Basic Finance
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