UNIT 7 MT 217 Corporation provided the following data: Target capital structure: 30% debt, 20%

UNIT 7 MT 217 Corporation provided the following data: Target capital structure: 30% debt, 20% preferred, and 50% common equity. The after-tax cost of debt is 6.00%, the cost of preferred is 9.00%, and the cost of retained earnings is 12.00%. What is the firm’s WACC? (Points: 8)

9.60%

10.00%

8.55%

9.85%

9.00% SOLUTION