Allcity, inc., is financed 35 % with debt, 10 % with preferred stock, and 55 % with common stock. its cost of debt is 6.4 %, its preferred stock pays an annual dividend of $ 2.49 and is priced at $ 28. it has an equity beta of 1.16. assume the risk-free rate is 2.4 %, the market risk premium is 7.4 % and allcity's tax rate is 35 %. what is its after-tax wacc? note: assume that the firm will always be able to utilize its full interest tax shield.

Peppy knows a lot about marketing, but not much about the legal or financial aspects of starting a new business. he wants to consult with a lawyer and accountant, but his budget is tight with all of the expenses involved in getting peppy's pizzazzeria up and running. peppy should: trust his basic instincts and try to put it together without the advice of lawyers and accountants. delay talking with a lawyer and accountant until the business has established a positive cash flow for at least one year. immediately hire full-time lawyers and accountants for his staff. consult with a lawyer and accountant even though the budget is tight.