The relevant tax rate, Mullineaux Corporation has a target

The relevant tax rate

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Reference no: EM131333498

Mullineaux Corporation has a target capital structure of 60 percent common stock, 5 percent preferred stock, and 35 percent debt. Its cost of equity is 14 percent, the cost of preferred stock is 6 percent, and the cost of debt is 8 percent. The relevant tax rate is 35 percent. (Do not include the percent sign (%). Round your answer to 2 decimal places. (e.g., 32.16))

(a) Mullineaux's WACC is _____________ percent.

(b) Which of the following statement is true?

after tax, preferred stock is cheaper than debt

after tax, debt is cheaper than perferred stock

Reference no: EM131333498

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