Cost of capital of the rate at which the company pays taxes

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Reference no: EM131510990

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

40?% ?debt,20?% preferred? stock, and 40% common stock. The cost of financing with retained earnings is 15?%, the cost of preferred stock financing is

8?%, and the? before-tax cost of debt financing is 8?%. Calculate the weighted average cost of capital ?(WACC?)

given a tax rate of30%.

Reference no: EM131510990

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