A firmrsquos capital consists of - 10m in common with a 14


A firm’s capital consists of: - $10m in common with a 14% yield - $6m in preferred with a 7.5% coupon and a 9% yield - $4m in bonds with a 6% coupon and a 4.3% yield-to-maturity. Its average tax rate is 24% and its marginal tax rate is 32%. What is the firm’s average cost of capital?

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Financial Management: A firmrsquos capital consists of - 10m in common with a 14
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