Firm weighted average cost of capital

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A firm is financed with 413 debt, 410 common equity and 184 preferred equity. The before-tax cost of debt is 5%, the firm's cost of common equity is 15%, and that of preferred equity is 10%. The marginal tax rate is 30%. What is the firm's weighted average cost of capital? 

I found the following on coursehero.com but it is slightly different:

A firm is financed with 30% debt, 60% common equity and 10% preferred equity. The before-tax cost of debt is 5%, the firm's cost of common equity is 15%, and that of preferred equity is 10%. The marginal tax rate is 30%. What is the firm's weighted average cost of capital? A. 10.05% B. 11.05% C. 12.5% D. None of the above

WACC = rD (1 - TC)(D/V) + rP (P/V) + rE (E/V)

(5)(1 - 0.3)(0.3) + (10)(0.1) + (15)(0.6) = 11.05

Reference no: EM131989516

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