Umbrella Corp's common stock currently is selling at $23 per share. There are 180,000\\noutstanding shares of common stock. Umbrella Corp also has 50,000 outstanding preferred\\nshares that are currently selling at $35 per share. Umbrella Corp also has issued 5,000 bonds\\nwhich are each currently selling at $968. The cost of capital for Umbrella Corp. is 13% for its\\ncommon stock, 10% for its preferred shares, and 8% for its bonds. Given it has a tax rate of 30%, \\nwhat is Umbrella Corp.'s adjusted weighted-average cost of capital?

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
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Umbrella Corp.'s common stock currently is selling at $23 per share. There are 180,000\\noutstanding shares of common
stock. Umbrella Corp also has 50,000 outstanding preferred\\nshares that are currently selling at $35 per share. Umbrella
Corp also has issued 5,000 bonds\\nwhich are each currently selling at $968. The cost of capital for Umbrella Corp. is 13%
for its\\ncommon stock, 10% for its preferred shares, and 8% for its bonds. Given it has a tax rate of 30%, \ \nwhat is
Umbrella Corp.'s adjusted weighted-average cost of capital?
Transcribed Image Text:Umbrella Corp.'s common stock currently is selling at $23 per share. There are 180,000\\noutstanding shares of common stock. Umbrella Corp also has 50,000 outstanding preferred\\nshares that are currently selling at $35 per share. Umbrella Corp also has issued 5,000 bonds\\nwhich are each currently selling at $968. The cost of capital for Umbrella Corp. is 13% for its\\ncommon stock, 10% for its preferred shares, and 8% for its bonds. Given it has a tax rate of 30%, \ \nwhat is Umbrella Corp.'s adjusted weighted-average cost of capital?
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