Target capital structure-what is the aftertax cost of debt

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Reference no: EM131905398

Mullineaux Corporation has a target capital structure of 70 percent common stock, 10 percent preferred stock, and 20 percent debt. Its cost of equity is 12 percent, the cost of preferred stock is 6 percent, and the pretax cost of debt is 8 percent. The relevant tax rate is 40 percent.

a. What is the company’s WACC?

b. What is the aftertax cost of debt?

Reference no: EM131905398

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