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Do Homework - Cristian Clementi - Google Chrome Secure | https://www.mathxl.com yerHomework.aspx?homeworkId=448 577574&questionld; = 1 &flushed; = false&cld-4704237;&centerwin; =yes FIN-350-MWF1230A-Fundamentals of Business Financs Cristian Clementi 12/4/17 1:33 PM Homework: Module 7: Chapter 9 Score: 0 of 5 pts P9-12 (similar to) Save 5 of 8 (0 complete ) | HW Score: 0%, 0 of 40 pts Question Help The The effect ot tax ate on WACC K Bell Jewelers wtshes to explore the effect on s cost ot capital of ne r te at hich the company pays taxes The timm wishes to maintain a capital structure of 30% debt 15% prefe ed stock, and 55% common stock cost of financing with retained earnings is 1 196 the cost of preferred stock financing is 11%, and the before tax cost of debt financing is 7%. Calculate the weighted average cost of capital (YACC) given a tax rate of 35% The firm's WACC is 96. (Round to two decimal places.) Enter your answer in the answer box and then click Check Answer All parts showing Clear All Check Answer 1:33 PM O Type here to search ^ · 4x 12/4/2017 EB) |

Explanation / Answer

After tax cost of debt=7(1-0.35)=4.55%

WACC=Respective costs*Respective weights

=(0.3*4.55)+(0.15*11)+(0.55*11)=9.07%(Approx)

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