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Weighted average cost of capital

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Jones company has a target capital structure of 30% debt, 15% preferred stock, and 55% common equity. The companys after tax cost of debt is 7%, its cost of preferred debt is 11%, its cost of retained earnings is 15%, and its cost of new common stock is 16%. The company stock has a beta of 1.5 and the company's marginal tax rate is 35%. What is the company's weighted average cost of capital if retained earnings are used to fund the common equity portion?

Reference no: EM131761271

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