Given the following information on S & G Inc.'s capital structure, compute the company's weighted
average cost of capital.
Type of Capital
Percent of
Capital Structure
Before-Tax
Component Cost
Bonds 40% 7.5%
Preferred Stock 5% 11%
Common Stock (Internal Only) 55% 15%
The company's marginal tax rate is 40%.
A) 13.3% B) 10% C) 7.1% D) 10.6%
D
Business
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