Solution-Calculate the weighted average cost of capital

Calculate the weighted average cost of capital employed

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Reference no: EM13860288

Gold Company had net income of $2,990,000 last year. Gold provided the following information on its capital structure: Total Amount Interest Rate Mortgage bonds $5,000,000 6% Unsecured bonds $10,000,000 8% Common stock $20,000,000 The common stock is no more or less risky than other stock and has a premium of 6% above the rate on long-term treasuries (currently 5%). Gold's tax rate is 40%.

1. Calculate the weighted average cost of capital employed by filling in the following table. (Round all calculations to four significant digits. Enter percent in decimals. For example Enter 34.567% as 0.3457. Use rounded computations in subsequent calculations, if required.)

Reference no: EM13860288

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Calculate the weighted average cost of capital employed

Reference no: EM13860288

Reference no: EM13860288

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