What is the aftertax cost of debt-target capital structure

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Bargeron Corporation has a target capital structure of 61 percent common stock, 6 percent preferred stock, and 33 percent debt. Its cost of equity is 12.6 percent, the cost of preferred stock is 5.6 percent, and the pretax cost of debt is 7.3 percent. The relevant tax rate is 34 percent.

a. What is the company’s WACC? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) WACC%

b. What is the aftertax cost of debt? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.) Aftertax cost of debt %

Reference no: EM131351325

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