DQuestion 1 1 pts Mullineaux Corporation has a target capital structure of 56 pe

Question

DQuestion 1 1 pts Mullineaux Corporation has a target capital structure of 56 percent common stock and 5 percent preferred stock, with the remaining percent in debt. Its cost of equity is 10 percent, the cost of preferred stock is 4 percent, and the pretax cost of debt is 6 percent. The relevant tax rate is 31 percent. What is the aftertax cost of debt? Enter your answer as a percentage, omit the'%" sign in your response, and round your answer to 2 decimal places. For example, 0.12345 or 12.345% should be entered as 12.35.)

Explanation / Answer

After tax cost of debt = Pre tax Cost of debt * (1- tax rate) = 6% *(1-31%) = 4.14%

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