What is the aftertax cost of debt

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Mullineaux Corporation has a target capital structure of 75 percent common stock, 15 percent preferred stock, and 10 percent debt. Its cost of equity is 8 percent, the cost of preferred stock is 5 percent, and the pretax cost of debt is 7 percent. The relevant tax rate is 35 percent.

a. What is Mullineaux's WACC? (Round your answer to 2 decimal places.

b. What is the aftertax cost of debt? (Round your answer to 2 decimal places.

Reference no: EM13257395

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