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Dartex Industries: Calculate WACC at a marginal tax rate of 34%

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The capital structure of Dartex Industries and the pretax cost of capital for each component are shown in the table below. Calculate Dartex's weighted average cost of capital given that their marginal tax rate is 34 percent.

Dartex Industries (in $000s)

Component --------Value-----Cost of Capital

Bonds-------------$2,000---------7.5%
Preferred stock----$1,000--------15.0%
Common stock----$5,000--------20.0%
Total--------------$8,000.

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The solution calculates WACC of of Dartex Industries, given its capital structure, pretax cost of capital for each component and the tax rate.

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The capital structure of Dartex Industries and the pretax cost of capital for each component are shown in the table below. Calculate Dartex's weighted average cost of capital given that their marginal tax rate is 34 percent.

Dartex Industries (in $000s)

Component --------Value-----Cost of ...

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