Given the tax rate of 40 of this corporation calculate its

Question

Part I. Given the tax rate of 40% of this corporation, calculate its after-tax weighted average cost of capital (WACC) for Duke Corporation.

Table: the before-tax weighted average cost of capital (WACC) for Duke Corporation

Source of Capital                     Weight (1)                    Cost (2)                        Weighted Cost (1) X (2)

Long-Term Debt                       .4                                5.6%                             2.24%

Preferred Stock                       .1                               10.6%                            1.06%

Common Stock Equity             .5                              13%                               6.5%

Totals                                      1                                -                                    9.8%

Part II. Answer true, false or uncertain and explain briefly on the following statement. "the after-tax wacc cannot ever be higher than the before-tax wacc."