Pfd Company has debt with a yield to maturity of 5.6%, a cost of equity of 12.8%, and a cost of preferred stock of 9.2%. The market values of its debt, preferred stock, and equity are $11.8 million, $2.5 million, and $13.9 million, respectively, and its tax rate is 21%. What is this firm's after-tax WACC? Note: Assume that the firm will always be able to utilize its full interest tax shield. ... Pfd's WACC is%. (Round to two decimal places.)

Essentials Of Investments
11th Edition
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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Pfd Company has debt with a yield to maturity of 5.6%, a cost of equity of 12.8%, and a cost of preferred stock of
9.2%. The market values of its debt, preferred stock, and equity are $11.8 million, $2.5 million, and $13.9 million,
respectively, and its tax rate is 21%. What is this firm's after-tax WACC?
Note: Assume that the firm will always be able to utilize its full interest tax shield.
Pfd's WACC is %. (Round to two decimal places.)
Transcribed Image Text:Pfd Company has debt with a yield to maturity of 5.6%, a cost of equity of 12.8%, and a cost of preferred stock of 9.2%. The market values of its debt, preferred stock, and equity are $11.8 million, $2.5 million, and $13.9 million, respectively, and its tax rate is 21%. What is this firm's after-tax WACC? Note: Assume that the firm will always be able to utilize its full interest tax shield. Pfd's WACC is %. (Round to two decimal places.)
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