McKean, Inc. has a debt-equity ratio of.70 and a tax rate of 34 %. The firm does not issue preferred stock. The cost of equity is 12 % and the after-tax cost of debt is 6 %. What is McKean's weighted average cost of capital?
A) 7.3 %
B) 7.9 %
C) 8.5 %
D) 8.7 %
E) 9.5 %
Correct Answer:
Verified
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