CFA Practice Question

There are 233 practice questions for this study session.

CFA Practice Question

A firm's target proportions of debt, preferred, and common stock are 40%, 30%, and 30% respectively. The after-tax return on debt is 8%, the return on preferred stock is 13%, and the return on common stock is 15%. What is the firm's weighted average cost of capital?
A. 11.6%
B. 12.6%
C. 13%
Explanation: The WACC is 0.40(8) + 0.30(13) + 0.30(15) = 11.6%.

User Contributed Comments 1

User Comment
farhan92 For my corporate finance module at uni calculating WACC was 2 pages worth of work and worth 15%!
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