Baxter Inc has a target capital structure of 30% debt, 15% preferred stock, and 55% common equity
The company's after-tax cost of debt is 7%, its cost of preferred stock is 11%, its cost of retained
earnings is 15%, and its cost of new common stock is 16%. The company stock has a beta of 1.5 and
the company's marginal tax rate is 35%. What is the company's weighted average cost of capital if
retained earnings are used to fund the common equity portion?
A) 13.80% B) 11.20% C) 12.00% D) 14.45%
C
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Which of the following is true about the federal appeals courts?
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