The company's after‐tax cost of debt is 14% and the cost of equity is 16%. given that the company's weighted average cost of capital is 14.5%, its cost of preferred equity is closest to:

a)4.5%

b)3.5%

c)4.0%

c)4.0%

Explanation:

The formula to compute WACC is shown below:

Weighted average cost of capital = Weightage of debt × cost of debt  + (Weightage of preferred equity) × (cost of preferred equity) + (Weightage of  common stock) × (cost of common stock)

14.5% = (0.45 × 14%) +  (0.05 × cost of preferred equity) +  (0.50 × 16%)

14.5% = 6.3% +   (0.05 × cost of preferred equity) + 8%

After solving this, the cost of preferred equity would be 4%

answer: b. false

the staff is a set of five horizontal lines and four spaces which represent a different musical pitch. the lines and the spaces are numbered from bottom to top, the bottom line is the first line and the fifth line is the line on the top. the notes on the top of the staff (fifth line) have a higher pitch than a note at the bottom of the staff.