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Calculate the weighted average cost of capital

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Question - Miller Ltd has a target capital structure of 50% equity, 10% preference shares and 40% debt. The costs of these components are: cost of equity: 15%, cost of preference capital: 8% and cost of debt: 7%.

i. Calculate Miller Ltd's weighted average cost of capital.

ii. Assuming a corporate tax rate of 30%, calculate the weighted average cost of capital (WACC) for Miller Ltd on an after-tax basis.

Reference no: EM131680094

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