Calculate the weighted average cost of capital

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Reference no: EM133375029

Question: The WACC K. Bell Jewelers wishes to explore the effect on its cost of capital of the rate at which the company pays taxes. The firm wishes to maintain a capital structure of 20% debt, 15% preferred stock, and 65% common stock. The cost of financing with retained earnings is 16%, the cost of preferred stock financing is 9%, and the before-tax cost of debt financing is 11%. Calculate the weighted average cost of capital (WACC) given a tax rate of 21%.

Reference no: EM133375029

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