Target capital structure-what is the aftertax cost of debt

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Reference no: EM13947866

Mullineaux Corporation has a target capital structure of 62 percent common stock, 7 percent preferred stock, and 31 percent debt. Its cost of equity is 13.2 percent, the cost of preferred stock is 6.2 percent, and the cost of debt is 7.9 percent. The relevant tax rate is 30 percent.

Required: (a) What is Mullineaux’s WACC? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)

WACC:

(b) What is the aftertax cost of debt? (Do not round intermediate calculations. Enter your answer as a percentage rounded to 2 decimal places (e.g., 32.16).)

Aftertax cost of debt:

Reference no: EM13947866

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