5 Mullineaux Corporation has a target capital structure of 55 percent common stock and 45 percent...

5

Mullineaux Corporation has a target capital structure of 55 percent common stock and 45 percent debt. Its cost of equity is 12.6 percent, and the cost of debt is 7.3 percent. The relevant tax rate is 21 percent.

What is the company’s WACC? (Do not round intermediate calculations and enter your answer as a percent rounded to 2 decimal places, e.g., 32.16.)

Expert Solution

Ans 9.53%

	Investment	Before Tax Cost	After Tax Cost (Before Tax Rate* (1 - Tax Rate))	Average Cost
Debt	45	7%	5.77%	2.60
Common Stock	55	12.60%	12.60%	6.93
	100	Total Cost		9.53

	After tax cost of common stock is same as before tax. Since there is no tax effect on common stock

jeff jeffy answered 1 year ago

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