Equity Lighting Corp. Wihe to explore the effect on it cot of capital of the
rate at which the company pay taxe. The firm wihe to maintain a
capital tructure of 30% debt, 10% preferred tock, and 60% common
tock. The cot of financing with retained earning i 14%, the cot of
preferred tock financing i 9%, and the before-tax cot of debt financing
i 11%. Calculate the weighted average cot of capital (WACC) given the
tax rate aumption in part a to c. A. Tax rate 40%
b. Tax rate 35%
c. Tax rate 25%
