Calculating the Weighted Cost of Capital
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Assume that the after-tax cost of debt is 7%, the cost of preferred stock is 9%, and the cost of common stock is 12%. Debt is 50% of long-term financing, preferred stock is 15%, and common stock is 35%. What is the weighted cost of capital?
I need help with this. I am not sure which formula to use and how to lay it out.
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This solution helps calculate the weighted cost of capital.
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WACC is calculated by multiplying the cost of each capital component by its proportional weighting ...
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