What is the company cost of capital


Question: Carla Vista Corporation is financed with debt, preferred equity, and common equity with market values of $22 million, $12 million, and $32 million, respectively. The betas for the debt, preferred stock, and common stock are 0.2, 0.6, and 1.1, respectively. The risk-free rate is 3.90 percent, the market risk premium is 6.04 percent, and Carla Vista's average and marginal tax rates are both 30 percent. What is the company's cost of capital?

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Accounting Basics: What is the company cost of capital
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