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Clive Limited Company has a cost of debt of 7%, a cost of equity of 11%, and a cost of preferred stock of 8%.  The firm has 104,000 shares of common stock outstanding at a market price of $20 a share.  There are 40,000 shares of preferred stock outstanding at a market price of $34 a share.  The bond issue has a total face value of $500,000 and sells at 102% of face value. The tax rate is 34%. What is the Weighted Average Cost of Capital WACC?

Clive Limited Company has a cost of debt of 7%, a cost of equity of 11%, and a cost of preferred stock of 8%.  The firm has 104,000 shares of common stock outstanding at a market price of $20 a share.  There are 40,000 shares of preferred stock outstanding at a market price of $34 a share.  The bond issue has a total face value of $500,000 and sells at 102% of face value. The tax rate is 34%. What is the Weighted Average Cost of Capital WACC?

Essentials Of Investments
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
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Clive Limited Company has a cost of debt of 7%, a cost of equity of 11%, and a cost of preferred stock of 8%.

 The firm has 104,000 shares of common stock outstanding at a market price of $20 a share.

 There are 40,000 shares of preferred stock outstanding at a market price of $34 a share.

 The bond issue has a total face value of $500,000 and sells at 102% of face value. The tax rate is 34%.

What is the Weighted Average Cost of Capital WACC?

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