Calculate weighted average cost of capital

Reference no: EM1339477

1. Foe Corporation's has the capital structure given below:

Debt (at market value) $2,000,000

Preferred stock (at market value) $800,000

Common stock (at market value) $ 3,000,000

Assuming the market weight are also the target weights for Foe Corp. please calculate the weights that should be used to find the weighted average cost of capital for Foe Corp.

2. For the problem above, if the after tax cost of debt is 8% the cost of preferred stock is 9% and the cost of common stock is 12%, what is the weighted average cost of capital?

Reference no: EM1339477

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