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Shi Import-Export's balance sheet shows $300 million in debt, $50 million in preferred stock, and $250...

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Finance

Shi Import-Export's balance sheet shows $300 million in debt,$50 million in preferred stock, and $250 million in total commonequity. Shi's tax rate is 30%, rd = 6%, rps =7.9%, and rs = 10%. If Shi has a target capitalstructure of 30% debt, 5% preferred stock, and 65% common stock,what is its WACC? Round your answer to two decimal places.

%

After-Tax Cost of Debt

LL Incorporated's currently outstanding 11% coupon bonds have ayield to maturity of 14%. LL believes it could issue new bonds atpar that would provide a similar yield to maturity. If its marginaltax rate is 30%, what is LL's after-tax cost of debt? Round youranswer to two decimal places.

%

Answer & Explanation Solved by verified expert
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The weighted average cost of capital is calculated using the below formula WACCWdKd1tWpsKpsWeKe where Wd Percentage of debt in    See Answer
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