Computing firm''s wacc, Computing firm's WACC and and you

Computing firm''s wacc

Reference no: EM1312873

Computing firm's WACC

You were hired as a consultant to Locke Company, and you were provided with the Following data: Target capital structure: 40% debt, 10% preferred, and 50% common equity. The interest rate on new debt is 7.5%, the yield on the preferred is 7.0%, the cost of retained earnings is 11.50%, and the tax rate is 40%. The firm will not be issuing any new stock. What is the firm's WACC?

a. 8.25%

b. 8.38%

c. 8.49%

d. 8.61%

e. 8.76%

Reference no: EM1312873

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