Based on current market values,Shawhan Supply's capital structure is 30% debt,20% preference shares,and 50% ordinary shares.When using book values,capital structure is 25% debt,10% preference shares,and 65% ordinary shares.The required return on each component is: debt-10%;preference shares-11%;and ordinary shares-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% preference shares,and 50% ordinary shares.When using book values,capital structure is 25% debt,10% preference shares,and 65% ordinary shares.The required return on each component is: debt-10%;preference shares-11%;and ordinary shares-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 30