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What is rockfords cost of capital

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Reference no: EM132568941

Rockford Development has the following mix of financing available Proportion

Cost Debt

financing 40% 9%

Preferred tock 10% 13%

Common stock 25% 12%

Retained earnings 25% 12%

Rockford is considering the following projects:

Return

Project A 11.40%

Project B 11.25%

Project C 11.00%

Project D 10.90%

Project E 10.90% Project F 10.40%

Required:

Question a. What is Rockford's cost of capital?

Question b. Given an unlimited budget, which project should Rockford accept?

Reference no: EM132568941

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