Capital of the rate at which the company pays taxes

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Reference no: EM132034772

The effect of tax rate on 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, 10% preferred stock, and 70% common stock. The cost of financing with retained earnings is 18%, the cost of preferred stock financing is 9%, and the before-tax cost of debt financing is 9%. Calculate the weighted average cost of capital (WACC) given a tax rate of 25 %. The firm's WACC is %. (Round to two decimal places.)

Reference no: EM132034772

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