Based on current market values,Shawhan Supply 's capital structure is 30% debt,20% preferred stock,and 50% common stock.When using book values,capital structure is 25% debt,10% preferred stock,and 65% common stock.The required return on each component is: debt-10%;preferred stock-11%;and common stock-18%.The marginal tax rate is 40%.What rate of return must Shawhan Supply earn on its investments if the value of the firm is to remain unchanged?

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The Answer of Based on current market values,Shawhan Supply 's capital structure is 30% debt,20% preferred stock,and 50% common stock.When using book values,capital structure is 25% debt,10% preferred stock,and 65% common stock.The required return on each component is: debt-10%;preferred stock-11%;and common stock-18%.The marginal tax rate is 40%.What rate of return must Shawhan Supply earn on its investments if the value of the firm is to remain unchanged?

Based on Current Market Values,Shawhan Supply 'S Capital Structure Is