Mullineaux Corporation has a target capital structure of 60 percent common stock

Question

Mullineaux Corporation has a target capital structure of 60 percent common stock and 40 percent debt. Its cost of equity is 12 percent, and the cost of debt is 6 percent. The relevant tax rate is 30 percent. What is Mullineaux’s WACC? (Do not round intermediate calculations and round your answer to 2 decimal places. (e.g., 32.16)) Mullineaux Corporation has a target capital structure of 60 percent common stock and 40 percent debt. Its cost of equity is 12 percent, and the cost of debt is 6 percent. The relevant tax rate is 30 percent. What is Mullineaux’s WACC? (Do not round intermediate calculations and round your answer to 2 decimal places. (e.g., 32.16))

Explanation / Answer

WACC=We*Ke +Wd*Kd*(1-tax)=0.6*12+0.4*6*(1-0.3)=8.88%

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