were hired as a consultant to Giambono Company, whose target capital structure is 40% debt, 15% preferred, and 45% common equity.The after-tax cost of debt is 6.00%, the cost of preferred is 7.50%, and the cost of common using retained earnings is 12.75%.The firm will not be issuing any new stock.What is its WACC?

Question

Quizplus · Accepted Answer

The WACC is calculated as follows: WACC = (0.40 * 6.00%) + (0.15 * 7.50%) + (0.45 * 12.75%) = 2.40% + 1.125% + 5.7375% = 9.2625%, which rounds to 9.26%.

Were Hired as a Consultant to Giambono Company, Whose Target