What is the WACC for a firm with 40% debt, 20% preferred stock and 40% equity if the respective costs for these components are 6% after-tax, 12% after-tax, and 18% before-tax? The firm's tax rate is 35%.
A) 9.48%
B) 11.16%
C) 12.00%
D) 15.60% WACC = (.4 x .06) + (.2 x .12) + (.4 x .18)
= ) 024 + .024 + .072
Correct Answer:
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