Bermuda Cruises issues only common stock and coupon bonds. The firm has a debt–equity ratio of .85. The cost of equity is 12.1 percent and the pretax cost of debt is 6.9 percent. What is the capital structure weight of the firm's equity if the firm's tax rate is 39 percent?   Multiple Choice   .6123   .5127   .5405   .4595   .5858

Optimist Company can sell common shares at $30 per share and can obtain debt funding at 8 percent. It has a marginal income tax rate of 25 percent. The yield on US Treasury securities is 3 percent. The market risk premium is 6.0 percent, and the firm's beta is 0.9. It has a targeted debt-to-equity ratio of 1:1. What is its after-tax cost of debt? Maximum number of characters (including HTML tags added by text editor): 32,000 Show Rich-Text Editor (and character count)

Compute the WACC of a firm that currently has $1 million in debt and $2 million in equity and $1 million in preferred stock. The current yield to maturity on the firms debt is 2%. Equity holders require a 6% return and preferred stock holders require a 3.8% return. The current tax rate that applies to the firm is 30%. Write your answer as a decimal.

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