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Assume sources of financing include DEBT, PREFERRED STOCK and COMMON EQUITY....

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Accounting

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Assume sources of financing include DEBT, PREFERRED STOCK and COMMON EQUITY. I What is the cost of DEBT (you pick)? The Cost of my DEBT is 8% What is the cost of PREFERRED STOCK (you pick)? The Cost of my PREFERRED STOCK is 10% What is the cost of COMMON EQUITY (you pick)? The Cost of my COMMON EQUITY is 20% What is the relative weight of each source (you pick)? The weight of my DEBT is 50% The weight of my PREFERRED STOCK is 30% The weight of my COMMON EQUITY is 20% Now determine the weighted average cost of capital. Be specific and provide detail. The weighted average cost is 11% Your analysis is on target for the information presented. Let's dig deeper into things by thinking about the following...... Assume the applicable tax rate is 20% for this business. What would be the BEFORE-TAX cost of common equity in this case

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