HUNK Limited has hired you on as a consultant to assist with their capital budgeting. Their target capital structure is 30% debt, 10% preferred stock, and 60% common equity. The interest rate on new debt is 6.00%, the yield on the preferred stock is 8.00%, the cost of retained earnings is 11.00%, and the tax rate is 35%. The company will not be issuing any new stock. What is their WACC? (Ch. 10) Group of answer choices 7.71% 8.57% 9.20% 8.03% 6.86%

HUNK Limited has hired you on as a consultant to assist with their capital budgeting. Their target capital structure is 30% debt, 10% preferred stock, and 60% common equity. The interest rate on new debt is 6.00%, the yield on the preferred stock is 8.00%, the cost of retained earnings is 11.00%, and the tax rate is 35%. The company will not be issuing any new stock. What is their WACC? (Ch. 10) Group of answer choices 7.71% 8.57% 9.20% 8.03% 6.86%

EBK CONTEMPORARY FINANCIAL MANAGEMENT

14th Edition

ISBN:9781337514835

Author:MOYER

Publisher:MOYER

Chapter2: The Domestic And International Financial Marketplace

Section2.A: Taxes

Problem 5P

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