CORRECT ANSWER C. THOMAS’ COST OF CAPITAL IS 10.95% AS SHOWN BE...
132.
Correct answer c. Thomas’ cost of capital is 10.95% as shown below.
Long-term debt
[.08 x (1 - .4)] x .30
1.44%
Preferred stock
.11 x .25
2.75%
Common stock
.15 x .45
6.75%