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Capital Co. has a capital structure based on current market values that consists of 38 percent debt 3 percent preferred stock and 59 percent common stock.

Capital Co. has a capital structure based on current market values that consists of 38 percent debt 3 percent preferred stock and 59 percent common stock. If the returns required by investors are 8 percent 10 percent and 19 percent for the debt preferred stock and common stock respectively what is Capital’s after-tax Weighted Average Cost of Capital? Assume that the firm’s marginal tax rate is 40 percent..


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