What is after-tax wacc

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1. AllCity Inc. is financed 40% With debt, 10% with preferred stock, and 50% with common stock. Its pre-tax cost of debt is 6%, its preferred stock pays an annual dividend of $2.50 and is priced at $30. It has an equity beta of 1.1. Assume the risk-free rate is 2%, the market risk premium is 7% and AllCity's tax rate is 35%. What is its after-tax WACC?

2. Pfd Company has debt with a yield to maturity of 7%, a cost of equity of 13%, and a cost of preferred stock of 9%. The market values of its debt, preferred stock, and equity are $10 million, $3 million, and $15 million, respectively, and its tax rate is 40%. What is this firm's WACC?

Reference no: EM133117033

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