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QUESTION
You were hired as a consultant to MMM Company, whose target capital structure is 40% debt, 15% preferred, and 45% common equity. The after-tax cost of debt is 6%, the cost of preferred is 7.5%, and t
You were hired as a consultant to MMM Company, whose target capital structure is 40% debt, 15%
preferred, and 45% common equity. The after-tax cost of debt is 6%, the cost of preferred is 7.5%, and the cost of retained earnings is 12%. The firm will not be issuing any new stock. What is its WACC?
