What is the company weighted average cost of capital

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Problem 1: The management of LIVE has been reviewing the company's financing arrangements. The current financing mix is P650,000 of common stock, P200,000 of preferred stock (P50 par) and P300,000 of debt. Preferred stock pays a dividend of 8.5%. LIVE currently pays a common stock cash dividend of P5. The common stock sells for P55, and dividends have been growing at about 10% per year, while preference shares sell for P60. Debt currently provides a yield to maturity to the investor of 12%. Any new issue of securities will have a flotation cost of approximately 3%. LIVE has retained earnings available for the equity requirement. The company's effective income tax rate is 40%. What is the company's weighted average cost of capital (IN PERCENTAGE %)?.

Reference no: EM132730071

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