Tencent Corporation has a target capital structure of 70 percent common stock,5 percent preferred stock, and 25 percent debt. It's cost of equity is 11 percent, the cost of preferred stock is 5 percent, and the pre-tax cost of debt is 6 percent. The relevant tax rate is 23 percent. a. What is the company's WACC? b. What is the after-tax cost of debt?

Tencent Corporation has a target capital structure of 70 percent common stock,5 percent preferred stock, and 25 percent debt. It's cost of equity is 11 percent, the cost of preferred stock is 5 percent, and the pre-tax cost of debt is 6 percent. The relevant tax rate is 23 percent. a. What is the company's WACC? b. What is the after-tax cost of debt?

EBK CFIN

6th Edition

ISBN:9781337671743

Author:BESLEY

Publisher:BESLEY

Chapter11: The Cost Of Capital

Section: Chapter Questions

Problem 15PROB

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