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AA corporation has a capital structure consisting of 40% debt,10% preferred stock, and 50% common equity. Assume the firm has asufficient retained earnings to fund the equity portion of itscapital budget. It has 20-year, 14% semiannual coupon bonds thatsell at their par value of $1,000. The firm could sell, at par, $50preferred stock that pays a 8% annual dividend. AA’s beta is 1.4,the risk-free rate if 5%, and the market risk premium is 8%. AA isa constant growth firm that just paid dividend of $1.00, sells for$20.00 per share, and has a growth rate of 10%. AA’s tax rate is30%. what is AA’s WACC?i need specific calculation process for this question, not onlythe answer!!
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