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A company’s financing structure currently has the following composition: - Common shares (€750,000). The current price...

A company’s financing structure currently has the following composition:

- Common shares (€750,000). The current price quoted for the shares is €21.0 per share. The company expects to distribute an annual dividend of €2.7 per share.

- The company took out a 4-year loan last year for €100,000 at an interest rate of 6.9%.

- The corporate tax is 25%.

Calculate the cost of each source of financing and the company’s weighted average cost of capital, explaining your answer.

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jeff jeffy answered 1 year ago
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