GenBio Labs's balance sheet shows a total of $45 million long-term debt with a coupon rate of 7.00% and a yield to maturity = Rd = 6.0%. The company has $15 million of Preferred Stock with a Rp = 8.5% required return. The company has $225 million of common stock with a required return of Rs, = 14.0%. What is the WACC based on the target capital structure of 30% Debt, 10% Preferred Stock, and 60% Common Stock? TAX RATE = 25% a. 9.0% b. 9.4% c. 9.8% d. 10.2% e. 10.6%

GenBio Labs's balance sheet shows a total of $45 million long-term debt with a coupon rate of 7.00% and a yield to maturity = Rd = 6.0%. The company has $15 million of Preferred Stock with a Rp = 8.5% required return. The company has $225 million of common stock with a required return of Rs, = 14.0%. What is the WACC based on the target capital structure of 30% Debt, 10% Preferred Stock, and 60% Common Stock? TAX RATE = 25% a. 9.0% b. 9.4% c. 9.8% d. 10.2% e. 10.6%

International Financial Management

14th Edition

ISBN:9780357130698

Author:Madura

Publisher:Madura

Chapter17: Multinational Capital Structure And Cost Of Capital

Section: Chapter Questions

Problem 14QA

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