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AlexFokin [52]
3 years ago
10

Avery Corporation's target capital structure is 35% debt, 10% preferred, and 55% common equity. The interest rate on new debt is

6.50%, the yield on the preferred is 6.00%, the cost of common from reinvested earnings is 11.25%, and the tax rate is 25%. The firm will not be issuing any new common stock. What is Avery's WACC
Business
1 answer:
Andreyy893 years ago
8 0

Answer:

8.15%

Explanation:

The computation of the weighted average cost of capital as follows;

= After Cost of debt × weightage of debt + cost of preferred stock × weight of preferred stock + cost of common equity × weight of equity

= 6.50% × (1 - 0.40) × 35 ÷ 100 + 6% × 10 ÷ 100 + 11.25% × 55 ÷ 100

= 1.37% + 0.60% + 6.19%

= 8.15%

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3 years ago
Coca-Cola, Inc. and PepsiCo, Inc. have only one distributor each in the Phoenix area. The Phoenix market is an intensely competi
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B. The denial is justifiable given the level of interbrand competition.

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4 years ago
Suppose that businesses buy a total of $170 billion of the four resources (labor, land, capital, and entrepreneurial ability) fr
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3 years ago
A(n) is a request by an account holder to the bank not to pay a specific payment.
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the answer is stop payment!

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4 years ago
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