What is the weighted average cost of capital

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Reference no: EM13722056

Debreu Beverages has an optimal capital structure that is 70% common equity, 20% debt, and 10% preferred stock. Debreu's pre-tax cost of equity is 9%. Its pre-tax cost of preferred equity is 7%, and its pre-tax cost of debt is also 5%. If the corporate tax rate is 35%, what is the weighted average cost of capital?

A) Between 7% and 8%

B) Between 8% and 9%

C) Between 9% and 10%

D) Between 10% and 12%

Reference no: EM13722056

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