Baxter inc. has a target capital structure of 30% debt, 15% preferred stock, and 55% common equity. the company's after-tax cost of debt is 7%, its cost of preferred stock is 11%, its cost of retained earnings is 15%, and its cost of new common stock is 16%. the company stock has a beta of 1.5 and the company's marginal tax rate is 35%. what is the company's weighted average cost of capital if retained earnings are used to fund the common equity portion? a) 11.20%b) 12.00%c) 13.80%d) 14.45%

B)  WACC12.00000%

Explanation:

Ke0.15 (we are asked for the WACC if retained earnings are used, so we ould assing RE rate

Equity weight0.55

Kp0.11

Preferred Weight  0.2

Kd(1-t) (after-tax debt)0.07

Debt Weight0.3

WACC12.00000%

what do you mean.why did u repeat the question.

the correct answer is economics is a game without winners or losers.

unlike sports or games economic is a game without losers or winner rather it is a game where everyone wins. parties of business doing businesses exchange money with each other and hence exchange is done on the basis of goods. one party takes the goods and other sales it so there is winner on both sides. each party values more highly the good it gets than the good it gives up. both sides exchange only because both intend to increase their value. so there is no concept of lose or win.