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What the weighted average cost of capital for finance ltd is

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Reference no: EM132946101

Finance Ltd has the following capital structure:

Ordinary Equity ($1 shares) - market value $500,000

Preferred Shares - market value $100,000

Debt ($100 debentures) - market value $400,000

The component after-tax costs of capital are:

Ordinary Equity 8%

Preference Shares 7%

Debt 6%

Problem 1: The weighted average cost of capital for Finance Ltd is:

Select one:

a. 7.10%

b. 7.00%

c. 7.90%

d. 6.00%

Reference no: EM132946101

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