Calculate weighted average cost of capital

Question

Problem:

Brite Lighting Corporation wants to investigate the effect on its cost of capital based on the rate at which the company is taxed. The firm wishes to maintain a capital structure of 30% debt, 10% preferred stock, and 60% common stock. The cost of financing with retained earnings is 14% (i.e., r_s = 14%), the cost of preferred stock financing is 9% (r_ps = 9%), and the before-tax cost of debt is 11% (r_d = 11%).

Required:

Question: Calculate the weighted average cost of capital (WACC) given the tax rate assumptions in parts (a) to (c) below.

a) Tax rate = 40%.

b) Tax rate = 35%.

c) Tax rate = 25%.

Note: Explain the solution in detail.