Suppose That TW, Inc

question 67

Multiple Choice

Suppose that TW, Inc. has a capital structure of 25 percent equity, 15 percent preferred stock, and 60 percent debt. If the before-tax component costs of equity, preferred stock and debt are 13.5 percent, 9.5 percent and 4 percent, respectively, what is TW's WACC if the firm faces an average tax rate of 21 percent?

• A) 7.19 percent
• B) 6.70 percent
• C) 2.90 percent
• D) 9.0 percent

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