Chartered Financial Analyst Level 1
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An analyst collects the following data for a company:
- Bonds: Market Value €60 million, Before-tax Cost of Capital 6%
- Preferred Stock: Market Value €20 million, Cost of Capital 8%
- Common Stock: Market Value €120 million, Cost of Capital 15%
Given the company's marginal tax rate is 40%, the weighted average cost of capital (WACC) is closest to:
An analyst collects the following data for a company:
- Bonds: Market Value €60 million, Before-tax Cost of Capital 6%
- Preferred Stock: Market Value €20 million, Cost of Capital 8%
- Common Stock: Market Value €120 million, Cost of Capital 15%
Given the company's marginal tax rate is 40%, the weighted average cost of capital (WACC) is closest to:
Exam-Like
A
9.7%
50.0%
B
10.9%
25.0%
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