Reference no: EM132741906

Problem 1: Given the following information, calculate the weighted average cost of capital for Puppet Corporation. Assume the funds are internally generated.

Percent of capital structure:

Debt 59%
Common equity 30%
Preferred stock 11%

Additional information:

Bond coupon rate 6%
Bond yield 5%
Bond flotation coat 3%
Dividend, common (just paid) $ 1.17
Price, common $ 46.00
Price, preferred $ 49.00
Dividend, preferred 7%
Flotation cost, preferred $ 1.99
Flotation cost, common 8%
Corporate growth rate 8%
Corporate tax rate 44%