Business, 07.12.2021 05:00 dontcareanyonemo

Barton Industries expects that its target capital structure for raising funds in the future for its capital budget will consist of 40% debt, 5% preferred stock, and 55% common equity. Note that the firm's marginal tax rate is 25%. Assume that the firm's cost of debt, rd, is 10.3%, the firm's cost of preferred stock, rp, is 9.5% and the firm's cost of equity is 12.9% for old equity, rs, and 13.2% for new equity. Requried:
a. What is the firm's weighted average cost of capitalÂ (WACC1)Â if it uses retained earnings as its source of common equity?
b. What is the firm s weighted average cost of capitalÂ (WACC2)Â if it has to issue new common stock?Â

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