Assume that a firms after-tax cost of debt is 6%, its cost of preferred stock...
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Accounting
Assume that a firms after-tax cost of debt is 6%, its cost of preferred stock a 9%, and its cost of equity capital is 12%. A firm wants to invest $500,000 in a project. To finance the project, the firm plans to raise $200,000 by selling bonds, $150,000 by selling preferred stock, and $150,000 by retaining earnings. What is the firms weighted average cost of capital (WACC)?
| 8% |
| 9% |
| 7.74% |
| 8.7% |
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