A firm's estimated costs of debt, preferred stock, and common stock are 12%,17%, and 20%, respectively. Assuming equal funding from each source and a marginal tax rate of 40%, the weighted average cost of capital (WAAC) is closest to:
WACC = wd rd (1 - t) + wp rp + we r e= [0.12 × (1 - 0.40) + 0.17 + 0.20]/3 = 14.73%.