Target capital structure-what is the aftertax cost of debt

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Reference no: EM131561914

Bargeron Corporation has a target capital structure of 62 percent common stock, 7 percent preferred stock, and 31 percent debt. Its cost of equity is 13.7 percent, the cost of preferred stock is 6.7 percent, and the pretax cost of debt is 8.4 percent. The relevant tax rate is 30 percent. a. What is the company’s WACC? b. What is the aftertax cost of debt?

Reference no: EM131561914

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