The controller of olaf corporation wants to establish a

Reference no: EM13601312

The controller of Olaf Corporation wants to establish a minimum rate of return and would like to use a weighted-average cost of capital. Current data about the corporation's financing structure are as follows:

Debt Financing 40%
Preferred Stock 30%
Common Stock 20%
Retained Earnings 10%

The cost of debt is 4 percent. The dividend rate on the preferred stock issue is 3 percent. The cost of common cost is 2 percent and the cost of retained earnings is 5 percent.Compute the weighted-average cost of capital.

Reference no: EM13601312

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