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Calculate the weighted average cost of capital

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Question - Hacker Ltd. has the following capital structure:

5,000,000 $2 fully paid ordinary shares $10,000,000

Retained earnings $ 1,111,111

5 % preference shares $2 fully paid $ 200,000

10% mortgage $ 300,000

Cost of Each Source of Funds

COST OF CAPITAL

Ordinary shares 8% $2.90 per share

Preference shares 4.8% $2.60 per share

Mortgage 7.0% after-tax Not available

Required - Calculate the Weighted Average Cost of Capital.

Show separate calculations for ordinary shares and retained earnings. Proportions and weighted calculations to four decimal places. Final answer to two decimal places.

Reference no: EM132623340

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