CORRECT ANSWER B. ALBION’S COST OF CAPITAL IS 13.0% AS CALCULAT...
131.
Correct answer b. Albion’s cost of capital is 13.0% as calculated below.
Long-term debt
[.09 x (1 - .4)] x .30
1.60%
Preferred stock
.12 x .10
1.20%
Common stock
.17 x .60
10.20%