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Discuss the implications of the results

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Question - Given are the following capital structure and cost of capital. Compute the Weighted Average Cost of Capital considering all four sources of funds.

Cost (%)

Mortgage Bonds ($1,000 par) 40% $20,000,000 5.14

Preferred Stock ($100 par) 10% 5,000,000 13.40

Common Stock ($40 par) 40% 20,000,000 17.11

Retained Earnings 10% 5,000,000 16.00

Discuss the implications of the results. Using all four sources of funds, what financing mix would you recommend? Explain.

Reference no: EM132950276

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