College Business

posted by .

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

Respond to this Question

First Name
School Subject
Your Answer

Similar Questions

  1. accounting

    The overall (weighted average) cost of capital is composed of a weighted average of : a)The cost of common equity and the cost of debt b)The cost of common equity and the cost of preferred stock c)The cost of preferred stock and the …
  2. Accounting please help in homework

    The overall (weighted average) cost of capital is composed of a weighted average of : a)The cost of common equity and the cost of debt b)The cost of common equity and the cost of preferred stock c)The cost of preferred stock and the …
  3. finance

    You were hired as a consultant to Giambono Company, whose target capital structure is 40% debt, 15% preferred, and 45% common equity. The after-tax cost of debt is 6.00%, the cost of preferred is 7.50%, and the cost of retained earnings …
  4. Finance

    You were hired as a consultant to Giambono Company, whose target capital structure is 40% debt, 15% preferred, and 45% common equity. The after-tax cost of debt is 6.00%, the cost of preferred is 7.50%, and the cost of retained earnings …
  5. fin/370

    The target capital structure for Jowers Manufacturing is 51% common stock, 20% preferred stock, and 29% debt. If the cost of common equity for the firm is 20.8%, the cost of preferred stock is 11.8%, and the before tax cost of debt …
  6. Finance for Business

    The taught capital structure for QM Industries is 45% common stock 7% preferred and 48% debt. If the cost of common equity for the firm is 17%, the cost of preferred stock is 10%, the before-tax cost of debt is 8.4% and the firm tax …
  7. Finance

    Assume that you are the assistant to the CFO of XYZ Company. Your task is to estimate XYZ's WACC using the following data: The firm's tax rate is 40%. The current price of the 12% coupon, semiannual payment, non-callable bonds with …
  8. Finance

    You were hired as a consultant to ABC Company, whose target capital structure is 40% debt, 15% preferred, and 45% common equity. The before-tax cost of debt is 8.00%, the cost of preferred is 7.50%, and the cost of common is 12.75%. …
  9. finance

    the target capital structure for QM industries is 45% common stock, 5% preferred stock and 50% debt. If the cost of common equity for the firm is 18.9%, the cost of preferred stock is 10.7% and the before tax cost of debt is 7.7% and …
  10. Finance

    You were hired as a consultant to Giambono Company, whose capital structure is 40% debt, 15% preferred stocks, and 45% common stock equity. The after-tax cost of debt is 6.00%, the cost of preferred stocks is 7.50%, and the cost of …

More Similar Questions