**Answer:**

**a. What is the company’s WACC? **

R_Wacc = 13% (65%) + 5% (5%) + 6% (30%) * (1-0,25) = 10,05%

**b. What is the aftertax cost of debt?**

The aftertax cost of debt is:

R_Debt : (1 - 0,25) x 6% = 4,50%

**Explanation:**

The WACC it's defined by the formula :

**WACC: E/V*Re + D/V*Rd *(1-0,25)**

Re: 13,00% Cost of Common Equity

Re: 5,00% Cost of Preferred STOCK

Re: 6% Cost of Debt

E/V: 65% Percentage of financing that is Common Equity

PS/V: 5% Percentage of financing that is Preferred Stock

DB/V: 30% Percentage of financing that is Debt

Tax: 25% Corporate tax rate

**Now we have all of the components to calculate the WACC. **

**The WACC is: **

**R_Wacc = 13% (65%) + 5% (5%) + 6% (30%)*(1-0,25) = 10,05%
**

**The aftertax cost of debt is:
**

**R_Debt : (1 - 0,25) x 6% = 4,50%
**