Shirley's and Son have a debt-equity ratio of .60 and a tax rate of 35 percent. The firm does not issue preferred stock. The cost of equity is 10 percent and the pre-tax cost of debt is 8 percent.
What is Shirley's weighted average cost of capital?
A) 6.1 percent
B) 8.2 percent
C) 8.4 percent
D) 9.1 percent
E) 9.4 percent
Correct Answer:
Verified
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