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A firm plans to maintain its optimal capital structure of 30% debt, 20% preferred stock, and 50% common stock far into the future. The required...

A firm plans to maintain its optimal capital structure of 30% debt, 20% preferred stock, and 50% common stock far into the future. The required return on each component is: debt 10%, preferred stock 11%, and common stock 18%. Assuming a 40% marginal tax rate, what is the firm's weighted average cost of capital?

This question was asked on May 17, 2010.

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