A firm has a capital structure that uses 45% equity, 20% preferred shares, and 35% debt.The preferred shares have a current yield of 5.5%.The debt has a coupon rate of 10% and a current yield to maturity of 6.5%.The common shares have a yield of 8%.The firm has an income tax rate of 25%.What is the firm's WACC?
A)5.231%
B)6.700%
C)6.406%
D)6.975%

Question

Quizplus · Accepted Answer

The Answer is C

A Firm Has a Capital Structure That Uses 45% Equity