Essentials Of Investments
11th Edition
ISBN: 9781260013924
Author: Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher: Mcgraw-hill Education,
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Question
Suppose Dexter, Inc.'s target capital structure is as follows:
wd = 0.45, wp
s = 0.05, and wee = 0.50
Its before-tax cost of debt is 8%, its
8.4%, and its marginal tax rate is 40%. Calculate Dexter's WACC.
Here,
w d = percentage of debt in the capital structure
wps = percentage of preferred stock in the capital structure
wee= percentage of common stock in the capital structure
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