Thumbss company has the following capital structure: equity (fifty percent); debt (forty five percent) and preferred shares (five percent). The company's after-tax cost of debt is 14% and the cost of equity is 16%. Given that the company's weighted average cost of capital is 14.5%, its cost of preferred equity is?

Essentials Of Investments
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ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
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Thumbss company has the following capital structure: equity (fifty percent); debt (forty five percent) and preferred
shares (five percent). The company's after-tax cost of debt is 14% and the cost of equity is 16%. Given that the
company's weighted average cost of capital is 14.5%, its cost of preferred equity is?
Transcribed Image Text:Thumbss company has the following capital structure: equity (fifty percent); debt (forty five percent) and preferred shares (five percent). The company's after-tax cost of debt is 14% and the cost of equity is 16%. Given that the company's weighted average cost of capital is 14.5%, its cost of preferred equity is?
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