Estimating the wacc with three sources of capital


Eschevarria Research has the capital structure given here. If Eschevarria's tax rate is 30%, what is its WACC?

A Book Value Market Value Before-Tax Cost

Bonds

$1,000

$1,000

8%

Preferred stock

400

300

9%

Common stock

600

1,700

14%

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Finance Basics: Estimating the wacc with three sources of capital
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