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Weighted Average Cost of Capital in Global Technology

Global Technology's capital structure is as follows:

Debt
35%
Preferred stock
15%
Common equity
50%

The after-tax cost of debt is 6.5 percent; the cost of preferred stock is 10 percent; and the cost of common equity (in the form of retained earnings) is 13.5 percent.

Calculate Global Technology's weighted average cost of capital ( WACC ).

Solution Summary

Weighted average cost of capital is calculated.

$2.19