Suppose That PAW, Inc

question 53

Multiple Choice

Suppose that PAW, Inc. has a capital structure of 60 percent equity, 10 percent preferred stock, and 30 percent debt. If the before-tax component costs of equity, preferred stock and debt are 17.5 percent, 12 percent and 6.5 percent, respectively, what is PAW's WACC if the firm faces an average tax rate of 28%?

• A) 10.71%
• B) 12.00%
• C) 13.10%
• D) 13.65%

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