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What is wacc for giambono company

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Reference no: EM132755056

Problem 1: You were hired as a consultant to Giambono Company, whose target capital structure is 40% debt, 15% preferred, and 45% common equity. The after-tax cost of debt is 6.00%, the cost of preferred is 7.50%, and the cost of retained earnings is 11.50%. The firm will not be issuing any new stock. What is its WACC?

Option 1: 7.92%
Option 2: 6.70%
Option 3: 8.87%
Option 4: 7.66%
Option 5: 8.70%

Reference no: EM132755056

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