Compute the average weighted cost of capital

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Ada Sand and Gravel LLC sells concrete for $35 per yard. The variable cost per yard is $25. Fixed costs are $500,000 including depreciation of $80,000. Compute the cash breakeven in yards.

Below is the long term and capital section of the balance sheet for the Seattle Distributing Co.

Category

Value

Notes Payable

$300,000

Bonds Payable

500,000

Preferred Stock

100,000

Common Stock

500,000

Retained Earnings

400,000

Interest of notes is 6%, bonds payable 4%, preferred stock dividends are 5% and the common shareholders opportunity cost is 10%. The tax rate is 25%.

Compute the average weighted cost of capital. You may want to calculate your answer using Excel, and paste the solution into the solution window.

Reference no: EM131796655

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