Bargeron corporation has a target capital structure of 62 percent common stock, 7 percent preferred stock, and 31 percent debt. its cost of equity is 14.2 percent, the cost of preferred stock is 7.2 percent, and the pretax cost of debt is 8.9 percent. the relevant tax rate is 30 percent.

a. what is the company's wacc? (do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places,

e. g., 32.16.) wacc %

b. what is the aftertax cost of debt? (do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places,

e. g., 32.16.) aftertax cost of debt

Question

Dempsey

Business

16 August, 10:16

Bargeron corporation has a target capital structure of 62 percent common stock, 7 percent preferred stock, and 31 percent debt. its cost of equity is 14.2 percent, the cost of preferred stock is 7.2 percent, and the pretax cost of debt is 8.9 percent. the relevant tax rate is 30 percent.

a. what is the company's wacc? (do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places,

e. g., 32.16.) wacc %

b. what is the aftertax cost of debt? (do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places,

e. g., 32.16.) aftertax cost of debt

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Antoine Watkins · Answer 1

Bargeron corporation has a target capital structure of 62 percent common stock, 7 percent preferred stock, and 31 percent debt. its cost of equity is 14.2 percent, the cost of preferred stock is 7.2 percent, and the pretax cost of debt is 8.9 percent. the relevant tax rate is 30 percent. a. what is the company's wacc?