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Business, 09.10.2021 09:00 tifftiff22

highland industries has a target capital structure of 60% common equity, 10% preferred stock, and 30% debt. the cost of retained earnings is 15%, and the cost of a new stock issue is 17%. the firm anticipates having $24 million in retained earnings available over the coming year. preferred stock can be sold at a cost of 11%. the firm has a $15 million line of credit with a major bank, which has an after-tax cost of 6%. beyond this amount, debt would have to be raised through a bond issue, and would have an after-tax cost of 9%. highland industries has a marginal tax rate of 35%. what will be the firm's cost of capital using bonds, preferred stock, and external equity

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