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QUESTION

The effect of tax rate on WACC--- K. Bell Jewelers wishes to explore the effect on its cost of capital of the

The effect of tax rate on WACC--- K. Bell Jewelers wishes to explore the effect on its cost of capital of the

rate at which the company pays taxes. The firm wishes to maintain a capital structure of 35% debt, 20% preferred​ stock, and 45 % common stock. The cost of financing with retained earnings is 15%, the cost of preferred stock financing is 11%, and the​ before-tax cost of debt financing is 11​%. Calculate the weighted average cost of capital (WACC​) given a tax rate of 35 %. You must MUST use at least one of the following Excel functions to answer at least one part of the question: FV, PV, PMT, RATE, NPER, NPV, AVERAGE, STDEV, and IRR.

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