Assume youve been recently hired as the financial analyst

Reference no: EM13392171

Assume you've been recently hired as the financial analyst of Company D Ltd, which was recently formed to manufacture the new product. It has the following capital structure:

Common Stock of N$100 each N$ 40,000

7% Bonds of N$100 each N$ 25,000

9% Preferred Stock of N$100 each N$ 25,000

Retained Earnings N$ 10,000

Total N$ 1 00,000

The Company has earned N$ 20 per share on common stock. The tax rate is 50% and the shareholders' personal tax bracket is 25%. Calculate the weighted average cost of capital.

Reference no: EM13392171

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