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    Weighted average cost of capital (WACC)

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    Debt 35%
    preferred stock 15
    common equity 50

    The after-tax cost of debt is 6.5 percent; the cost of preferred stock is 10 percent; and the cost of common equity (in the form of retained earnings) is 13.5 percent.

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    debt   35%
    preferred stock 15
    common equity 50

    The after-tax cost of debt is 6.5 percent; the costof preferred stock is 10 percent; and the cost of ...

    Solution Summary

    Calculates Weighted average cost of capital (WACC).

    $2.49

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