Shawhan supply plans to maintain is optimal capital structure of 30% debt,

Shawhan supply plans to maintain is optimal capital structure of 30% debt, 20% preferred stock, and 50% common stock far into the future. The required return on each component is: debt 10%, preferred stock 11%, and common stock 18%. 31.Assuming a 40% marginal tax rate, what is the firm’s weighted average cost of capital?
a. 10%
b. 12%
c. 13%
d. 14.2%

 

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