Corporate Finance Q72

0. A firm’s estimated costs of debt, preferred stock, and common stock are 13%, 17%, and 22%, respectively. Assuming equal funding from each source and a 30% tax rate, the weighted average cost of capital is closest to:

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Option : B
Explanation : WACC = Wd Rd (1 – t) + Wp Rp + We Re = [0.13 * (1 – 0.30) + 0.17 + 0.22] / 3 = 16.03%

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