Suppose that MNINK Industries’ capital structure features 63 percent equity, 8 p

Question

Suppose that MNINK Industries’ capital structure features 63 percent equity, 8 percent preferred stock, and 29 percent debt. Assume the before-tax component costs of equity, preferred stock, and debt are 11.70 percent, 9.60 percent, and 9.00 percent, respectively. What is MNINK’s WACC if the firm faces an average tax rate of 34 percent? (Round your answer to 2 decimal places.) Suppose that MNINK Industries’ capital structure features 63 percent equity, 8 percent preferred stock, and 29 percent debt. Assume the before-tax component costs of equity, preferred stock, and debt are 11.70 percent, 9.60 percent, and 9.00 percent, respectively. What is MNINK’s WACC if the firm faces an average tax rate of 34 percent? (Round your answer to 2 decimal places.) Suppose that MNINK Industries’ capital structure features 63 percent equity, 8 percent preferred stock, and 29 percent debt. Assume the before-tax component costs of equity, preferred stock, and debt are 11.70 percent, 9.60 percent, and 9.00 percent, respectively. What is MNINK’s WACC if the firm faces an average tax rate of 34 percent? (Round your answer to 2 decimal places.)

Explanation / Answer

After tax cost of debt=9(1-0.34)=5.94%

WACC=Respective costs*Respective weights

=(0.63*11.7)+(0.08*9.6)+(0.29*5.94)

which is equal to

=9.86%(Approx).

Related Questions

Navigate

• Browse (All)
• Browse S
• Subjects

---

---

Integrity-first tutoring: explanations and feedback only — we do not complete graded work. Learn more.