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gadgetady5699
20.12.2019 •
Business
You were hired as a consultant to fenerbahce sk company, whose target capital structure is 35% debt, 10% preferred, and 55% common equity. the interest rate on new debt is 6.50%, the yield on the preferred is 6.00%, the cost of retained earnings is 14.75%, and the tax rate is 40%. the firm will not be issuing any new stock. what is quigley's wacc?
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Ответ:
10.0775%
Explanation:
The formula to compute WACC is shown below:
= Weightage of debt × cost of debt × ( 1- tax rate) + (Weightage of preferred stock) × (cost of preferred stock) + (Weightage of common stock) × (cost of retained earning)
= 0.35 × 6.50% × (1 - 0.40) + (0.10 ×6%) + (0.55 × 14.75%)
= 1.365% + 0.6% + 8.1125%
= 10.0775%
Simply we multiply the weighatge with the capital structure cost
Ответ:
wow
Explanation: