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21-10-2022
Business

Answered

Ninecent Corporation has a target capital structure of 65 percent common stock, 10 percent preferred stock, and 25 percent debt. Its
cost of equity is 10 percent, the cost of preferred stock is 4 percent, and the pretax cost of debt is 5 percent. The relevant tax rate is 22
percent.

a. What is the company's WACC?

b. What is the aftertax cost of debt?

Answer :

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