Compute the weighted average cost of capital

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Reference no: EM13790248

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Assume the following capital structure:

Debt 30%

Preferred stock 20%

Common equity 50 %

The following facts are provided:

Bond yield to maturity 6%

Corporate tax rate 35%

Dividend, Pre. Stock $2.00

Price, Pre. Stock $35.00

Floatation, Pre. stock $1.00

Dividend (Do), Com. Stock $2.00

Price, Com. Stock $25.00

Growth rate, Com. Stock 4%

Compute the weighted average cost of capital

Reference no: EM13790248

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