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You were hired as a consultant to Giambono Company, whose target capital structure is 40% debt, 15% preferred, and 45% common equity. The after-tax cost of debt is 6.00%, the cost of preferred stock is 7.50%, and the cost of retained earnings is 11.50%. The firm will not be issuing any new stock. What is its WACC

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abiolataiwo2015

Based on the information given the WACC is 12.75%.

Using this formula

WACC = (Weight of debt ×After-tax cost of debt) + (Weight of preferred ×Cost of preferred) + (Weight of common equity × Cost of common equity)

Let plug in the formula

WACC = (0.40× 0.06) + (0.15×0.075) + (0.45 × 0.115)

WACC=0.024+0.01125+0.05175

WACC =0.1275×100

WACC =12.75%

Inconclusion the WACC is 12.75%.

Learn more about WACC here:https://brainly.com/question/25566972

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