1. Pfd Company has debt with a yield to maturity of 7.8%, a cost of equity of 14.2%, and a cost of preferred stock of 9.1%. The market values of its debt, preferred stock, and equity are $14.5 million, $3.5 million, and $16.3 million, respectively, and its tax rate is 25%. What is this firm's after-tax WACC? Note: Assume that the firm will always be able to utilize its full interest tax shield. Pfd's WACC_____%. (Round to two decimal places.)
1. Pfd Company has debt with a yield to maturity of 7.8%, a cost of equity of 14.2%, and a cost of preferred stock of 9.1%. The market values of its debt, preferred stock, and equity are $14.5 million, $3.5 million, and $16.3 million, respectively, and its tax rate is 25%. What is this firm's after-tax WACC? Note: Assume that the firm will always be able to utilize its full interest tax shield. Pfd's WACC_____%. (Round to two decimal places.)
Intermediate Financial Management (MindTap Course List)
13th Edition
ISBN:9781337395083
Author:Eugene F. Brigham, Phillip R. Daves
Publisher:Eugene F. Brigham, Phillip R. Daves
Chapter11: Determining The Cost Of Capital
Section: Chapter Questions
Problem 7P
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1. Pfd Company has debt with a yield to maturity of 7.8%, a cost of equity of 14.2%, and a cost of preferred stock of 9.1%. The market values of its debt, preferred stock, and equity are $14.5 million, $3.5 million, and $16.3 million, respectively, and its tax rate is 25%. What is this firm's after-tax WACC?
Note: Assume that the firm will always be able to utilize its full interest tax shield.
Pfd's WACC_____%. (Round to two decimal places.)
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