Problem
A firm's stockholders expect an 18% rate of return, and there is $22M in common stock and retained earnings. The firm has $9M in loans at an average rate of 8%. The firm has raised $14M by selling bonds at an average rate of 4%. What is the firm's cost of capital: (a) Before taxes? (b) After taxes with a tax rate of 34%?
The response should include a reference list. Double-space, using Times New Roman 12 pnt font, one-inch margins, and APA style of writing and citations.