Jones company has a target capital structure of 40% debt 10% preferred stock and

Question

Jones company has a target capital structure of 40% debt 10% preferred stock and 50% common equity. The company cost of debt is 8%. Its cost of prefeered stock is 10%. Its cost of retained earnings is 14% and its cost of new common stock is 16%. The company's marginal tax rate is 35%. The company decided to that the company had the funding needed internally and would not have to issue new common stock. What is the company's WACC if retained earnings used to fund the common equity portion.

Answers: 10.08%, 6.72%, 16.8%, 8.00%

please so work
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Explanation / Answer

WACC = (D/V)*Rd*(1-T) + (E/V)*Re + (P/V)*Rp
=40%*8%*(1-35%) +50%*14%+10%*10% =10.08%

Answer
10.08%

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