The taught capital structure for QM Industries is 45% common stock 7% preferred and 48% debt. If the cost of common equity for the firm is 17%, the cost of preferred stock is 10%, the before-tax cost of debt is 8.4% and the firm tax rate is 35%, what is the weighted average cost of capital. QM's Wacc is ( ) % round to three decimal places.

Question

The taught capital structure for QM Industries is 45% common stock 7% preferred and 48% debt. If the cost of common equity for the firm is 17%, the cost of preferred stock is 10%, the before-tax cost of debt is 8.4% and the firm tax rate is 35%, what is the weighted average cost of capital. QM's Wacc is (                 ) % round to three decimal places.

University of Phoenix · Answer

How to work the problem.