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samualson samualson
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6 years ago
Baxter Inc. has a target capital structure of 30% debt, 15% preferred stock, and 55% common equity. The company's after-tax cost of debt is 7%, its cost of preferred stock is 11%, its cost of retained earnings is 15%, and its cost of new common stock is 16%. The company stock has a beta of 1.5 and the company's marginal tax rate is 35%. What is the company's weighted average cost of capital if retained earnings are used to fund the common equity portion?
A) 11.20%
B) 12.00%
C) 13.80%
D) 14.45%
Textbook 
Foundations of Finance

Foundations of Finance


Edition: 9th
Authors:
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wrote...
#1
6 years ago
 B
 
samualson Author
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#2
6 years ago
Exactly what I needed for my quiz Smiling Face with Open Mouth
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