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CFA Level 1 Exam

3959 Questions

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Question No. 1

Consider the following information:
Borrowing Rate 10%
Marginal Tax Rate 40%
Preferred Stock Par Price $50
Preferred Dividend $5
Preferred Stock floatation cost 2.0%
Cost of common equity 15.0%
Preferred Stock issued at Par
The Optimal Capital Structure is 45% debt, 50% common equity, and 5% preferred stock. Credit Rating BB+ What is the firm's Weighted Average Cost of Capital (WACC)?

Choose the correct option from the given list.
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