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WACC

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Reactive Industries has the following capital structure. Its corporate tax rate is 35 percent. What is its WACC?

SECURITY MARKET VALUE REQUIRED RATE OF RETURN
DEBT $20 Million 6%
PREFERRED STOCK $10 Million 8%
COMMON STOCK $50 Million 12%

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The solution calculates WACC

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WACC= weightage of common stock x cost of common stock + weightage of preferred ...

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