Reference no: EM132530295

Hhm incorporation wants to calculate its overall cost cost of capital the company is in the 40% tax bracket the financial manager has gather the following information. common stock the company's common stock is currently selling at dollar 15 for share and expects to pay dividend of dollars 0.40 per share in next year. The company dividend has been growing at the annual rate of 8% and this rate is expected to continue in the future. The company is expected to have dollar 3 300000 of retained earning available in coming year once they retained earning earning are exhausted the firm will issue news common stock. the new common stock will be an price by 0.50 per share and the floatation cost are dollars 0.30 Per share. Preferred read stock Preferred stock the company issued 10% of preferred stock at its dollar hundred percent value the cost of issuing and selling the preferred stock is expected to be Dollar to Per share Long term debt the company can rej death issuing at dollar hundred par value 12% coupon interest rate 10 year bond. it has to sell the bond the discount of 20% bound and must pay the flotation cost of Dollar 15 per bond. Required to calculate the individual cost of each source of financing.

Question 1: What is the company's w a c c using the which shown in the table given below. Source of capital common stock 55% (weight), preferred stock 15% (weight),long term debt 13% (weight) total 100%