Reference no: EM132744065

Question 1: Given the following information, compute the Weighted Average Cost of Capital (WACC) for internally generated funds:

# of Shares/Bonds Issued FMV for One Share/Bond

Preferred shares 18,000 $70.00

Common equity 90,000 $23.00

Debt 2,200 $970.00

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Corporate Tax Rate 38%

Dividend, Preferred $7.50

Dividend, Common $1.10 (next dividend payment)

Price, Preferred $70.00

Price, Common $23.00

Corporate Growth Rate 6%

Bond Yield (Mkt Rate) 8%

Flotation Costs, Preferred 4%

Flotation Costs, Common $1.96/ share

Flotation Costs, Debt 5%

Question 2: Given the information from Question 1, compute the Weighted Average Cost of Capital (WACC) for externally generated funds: