What is the firm-s weighted average cost of capital


Marginal Incorporated has determined that its before-tax cost of debt is 10.0%. Its cost of preferred stock is 11.0%. Its cost of internal equity is 15.0%, and its cost of external equity is 16.9%. Currently, the firm's capital structure consists of 32% debt, 14% preferred stock, and 54% common equity. The firm's marginal tax rate is 39%. What is the firm's weighted average cost of capital if it will have to issue new common stock to fund the equity portion of its capital budget?

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Finance Basics: What is the firm-s weighted average cost of capital
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