# Weighted average cost of​ capital)The target capital structure for Jowers Manufacturing is 50 percent common​ stock, 15 percent preferred​ stock, and 35 percent debt. If the cost of common equity for the firm is 20 percent, the cost of preferred stock is 12 ​percent, and the​ before-tax cost of debt is 10 ​percent, what is​ Jowers' cost of​ capital? The​ firm's tax rate is 34 percent.Jowers' cost of capital is     ​%. ​(Round to three decimal​ places.)

Question
Asked Nov 18, 2019
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Weighted average cost of​ capital)

The target capital structure for Jowers Manufacturing is 50 percent common​ stock, 15 percent preferred​ stock, and 35 percent debt. If the cost of common equity for the firm is 20 percent, the cost of preferred stock is 12 ​percent, and the​ before-tax cost of debt is 10 ​percent, what is​ Jowers' cost of​ capital? The​ firm's tax rate is 34 percent.

Jowers' cost of capital is     ​%. ​(Round to three decimal​ places.)

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Step 1

Calculation of Weighted Average Cost of​  Capital:

The weighted average cost of​  capital is 14.11%.

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