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    Caculating WACC in the given case

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    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 common using retained earnings is 12.75%. The firm will not be issuing any new stock. What is its WACC?


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    Solution Preview

    Weight of debt=wd=40%=0.40
    After tax cost of debt=rd=6.00%

    Weight of ...

    Solution Summary

    Solution describes the steps to calculate Weighted Average Cost of Capital.