You were hired as a consultant to Kangaroo Corporation, whose target capital structure is 30%...
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You were hired as a consultant to Kangaroo Corporation, whose target capital structure is 30% debt, 5% preferred, and 65% common equity. The before-tax cost of debt is 9.55%, the yield on preferred is 8.75%, and the cost of retained earnings is 14.00%. The tax rate is 35%. 1. What is the company's WACC? 2. If the FED declares the change in corporate tax rate to 40%, what is the after tax cost of debt? 3. Based on the new FED corporate tax, what is new firm's WACC
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