Target capital structure-what is aftertax cost of debt

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Reference no: EM131088005

Mullineaux Corporation has a target capital structure of 55 percent common stock, 5 percent preferred stock, and 40 percent debt. Its cost of equity is 9 percent, the cost of preferred stock is 6 percent, and the pretax cost of debt is 8 percent. The relevant tax rate is 40 percent.

a. What is Mullineaux’s WACC? (Round your answer to 2 decimal places. (e.g., 32.16)) WACC %

b. What is the aftertax cost of debt? (Round your answer to 2 decimal places. (e.g., 32.16)) Cost of debt %

Reference no: EM131088005

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