Determine the weighted cost of capital for the Mills Company that will finance its optimal capital budget with $120 million of long-term debt (k_d = 12.5%) and $180 million in retained earnings (k_e = 16.0%). Mills' present capital structure is considered optimal. The company's marginal tax rate is 40%. (Compute answer to nearest 0.1%.)

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The Answer of Determine the weighted cost of capital for the Mills Company that will finance its optimal capital budget with $120 million of long-term debt (k_d = 12.5%) and $180 million in retained earnings (k_e = 16.0%). Mills' present capital structure is considered optimal. The company's marginal tax rate is 40%. (Compute answer to nearest 0.1%.)

Determine the Weighted Cost of Capital for the Mills Company