Answer:
Weighted average cost of capital
= Ke(We) + Kp(Wp) + Kd(Wd)(1 - T)
Where
Ke = Cost of equity
We = Weight of equity in the capital structure
Kp = Cost of preferred stock
Wp = weight of preferred stock in the capital structure
Kd = Cost of debt
Wd = Weight of debt in the capital structure.
T = Tax rate
Step-by-step explanation:
Weighted average cost of capital equals cost of equity multiplied by the weight of equity in the capital structure plus cost of preferred stock multiplied by weight of preferred stock in the capital structure plus after tax cost of debt multiplied by weight of debt in the capital structure.