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September 15, 2014

Homework Help: College Business

Posted by tricica on Sunday, August 22, 2010 at 1:48am.

I have the following data:
40% debt, 10% preferred, and 50% common equity. After-tax cost of debt 4.00%, cost of preferred 7.50% and cost of retained earnings is 11.50%

in using this formula:
WACC = wdrd(1-T) + wprp + wcrs
r=(40%)(4.00%)+(10%)(7.50%)+(50%)(11.50%)=8%

Is this right

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