AllCity Inc. is financed 40% with debt, 15% with preferred stock, and 45% with common stock. Its pre-tax cost of debt is 6%, its preferred stock pays an annual dividend of $2.50 and is priced at $28. It has an equity beta of 1.4. Assume the risk-free rate is 2%, the market risk premium is 6%, and AllCity's tax rate is 35%. What is its after-tax WACC? What is its after-tax WACC? wace= (Round to five decimal places.)

AllCity Inc. is financed 40% with debt, 15% with preferred stock, and 45% with common stock. Its pre-tax cost of debt is 6%, its preferred stock pays an annual dividend of $2.50 and is priced at $28. It has an equity beta of 1.4. Assume the risk-free rate is 2%, the market risk premium is 6%, and AllCity's tax rate is 35%. What is its after-tax WACC? What is its after-tax WACC? wace= (Round to five decimal places.)

Corporate Fin Focused Approach

5th Edition

ISBN:9781285660516

Author:EHRHARDT

Publisher:EHRHARDT

Chapter9: The Cost Of Capital

Section: Chapter Questions

Problem 7P

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