Were Hired as a Consultant to Giambono Company, Whose Target

question 42

Multiple Choice

were hired as a consultant to Giambono Company, whose target capital structure is 40% debt, 15% preferred, and 45% common equity.The after-tax cost of debt is 6.00%, the cost of preferred is 7.50%, and the cost of common using retained earnings is 12.75%.The firm will not be issuing any new stock.What is its WACC?

• A)8.98%
• B)9.26%
• C)9.54%
• D)9.83%
• E)10.12%

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