AllCity, Inc., is financed 44% with debt, 15% with preferred stock, and 41% with common stock. Its pretax cost of debt is 6%, its preferred stock pays an annual dividend of $2.55 and is priced at $26. It has an equity beta of 1.14. Assume the risk-free rate is 1.9%, the market risk premium is 7% and AllCity's tax rate is 25%. What is its after-tax WACC? Note: Assume that the firm will always be able to utilize its full interest tax shield. The WACC is %. (Round to two decimal places.)

AllCity, Inc., is financed 44% with debt, 15% with preferred stock, and 41% with common stock. Its pretax cost of debt is 6%, its preferred stock pays an annual dividend of $2.55 and is priced at $26. It has an equity beta of 1.14. Assume the risk-free rate is 1.9%, the market risk premium is 7% and AllCity's tax rate is 25%. What is its after-tax WACC? Note: Assume that the firm will always be able to utilize its full interest tax shield. The WACC is %. (Round to two 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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