Allcity inc is financed 40 with debt 10 with preferred, Financial Management

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Allcity inc is financed 40 with debt 10 with preferred

AllCity Inc is financed 40% with debt, 10% with preferred stock, and 50% with common stock. Its pretax cost of debt is 6%. Its preferred stock pays an annual dividend of $2.50 and is priced at $30. It has an equity beta of 1.1. Assume the risk-free rate is 2%, the market risk premium is 7% and AllCitys’ tax rate is 35%. What is its after-tax WACC?

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Financial Management: Allcity inc is financed 40 with debt 10 with preferred

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Financial Management: Allcity inc is financed 40 with debt 10 with preferred

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