You were hired as a consultant to Giambono Company, whose target capital structure is 40% debt, 15% preferred, and 45% common

Question

You were hired as a consultant to Giambono Company, whose target capital structure is 40% debt, 15% preferred, and 45% common equity. The after-tax cost of debt is 6.00%, the cost of preferred is 7.50%, and the cost of retained earnings is 12.00%. The firm will not be issuing any new stock. What is its WACC?
a. 8.93%
b. 6.96%
c. 6.69%
d. 7.59%
e. 7.68%

Kunduz · Accepted Answer

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