The Longstreet Communications Inc

Finance Aug 06, 2020

The Longstreet Communications Inc. (LCI) has the following capital structure, which it considers to be optimal: debt = 30%, preferred stock = 20%, and the rest is common stock. LCI's tax rate is 40%. Cost of common stock is 13% and debt could be sold at an interest rate of 9%. LCI issued preferred stock at a price of $111.10 and the issue is expected to pay a constant annual dividend of $10. Calculate the firm's WACC. [5 Marks]

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