Cmmon stock is 400,000, long term debt is 200,000,and preferred stock is 200,000 common stock costs 16% long term
debt costs 8% and preferred stock codes 7%? The tax rate is% What is WACC?
I calculated Wts for Investments at
Preferred Stock 25%
Long Term Debt 25%
Wts for Returns at :
Common 0.0800 or 8%
Preferred 0.175 or 1.75%
Long Term Debt 0.0200 or 2%
I did the table method and got 11.75 percent for WACC but the answer is 12.55 %
I am not sure what to do with the tax rate??