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Weighted Average Cost of Capital (WACC) : key information

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A firm has determined its cost of each source of capital and optional capital structure which is composed of the following sources and target market value propositions:

Sources of Capital Target Market After-tax cost
Propositions

Long-term debt 40% 6%
Preferred Stock 10 11
Common stock equity 50 15

The weighted average cost of capital is:

A. 15%

B. 10.7%

C. 11%

D. 6%

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Solution Summary

Response helps in calculating weighted average cost of capital

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