Healthy Snacks Has a Target Capital Structure of 60 Percent

Healthy Snacks has a target capital structure of 60 percent common stock, 3 percent preferred stock, and 37 percent debt.Its cost of equity is 16.8 percent, the cost of preferred stock is 11.4 percent, and the pretax cost of debt is 8.3 percent.What is the company's WACC if the applicable tax rate is 34 percent?

A) 13.29 percent
B) 12.61 percent
C) 12.34 percent
D) 12.45 percent
E) 12.83 percent

Correct Answer:

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