What firm weighted average cost of capital for carton

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Question 1: Carton Industries expects that its target capital structure for raising funds in the future for its capital budget will consist of 40% debt, 5% preferred stock, and 55% common equity. Note that the firm's marginal tax rate is 40%. Assume that the firm's cost of debt, rd, is 7.7%, the firm's cost of preferred stock, rps, is 7.2% and the firm's cost of equity is 11.7% for old equity, rs, and 12.23% for new equity, re. What is the firm's weighted average cost of capital (WACC2) if it has to issue new common stock?

Reference no: EM132998162

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