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Business, 16.04.2020 18:26 rainbowboi

Barton Industries expects that its target capital structure for raising funds in the future for its capital budget will consist of 40% debt, 5% preferred stock, and 55% common equity. Note that the firm's marginal tax rate is 25%. Assume that the firm's cost of debt, rd, is 10.7%, the firm's cost of preferred stock, rp, is 9.9% and the firm's cost of equity is 13.3% for old equity, rs, and 13.8% for new equity, re.

What is the firm's weighted average cost of capital (WACC1) if it uses retained earnings as its source of common equity?

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