Shawhan supply plans to maintain is optimal capital structure of 30% debt, - 4451

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Shawhan supply plans to maintain is optimal capital structure of 30% debt, 20% preferred stock, and 50% common stock far into the future. The required return on each component is: debt 10%, preferred stock 11%, and common stock 18%. 31.Assuming a 40% marginal tax rate, what is the firm’s weighted average cost of capital? 

a. 10% 

b. 12% 

c. 13% 

d. 14.2% 

 
Solution Description

Shawhan supply plans to maintain is optimal capital structure of 3