Question
In: Finance
A firm has determined its cost of each source of capital and optimal capital structure, which...
A firm has determined its cost of each source of capital and
optimal capital structure, which is composed of the following
sources and target market value proportions:
Source of capital / Taget Market Proportions / After-Tax Cost
Long-term Debt/ 40% / 6%
Preferred Stock / 10% / 11
Common Stock Equity / 50 / 15
The weighted average cost of capital is
Source of capital / Taget Market Proportions / After-Tax Cost
Long-term Debt/ 40% / 6%
Preferred Stock / 10% / 11
Common Stock Equity / 50 / 15
The weighted average cost of capital is
Solutions
Expert Solution
weighted average cost of capital = 40% * 6% +10% * 11% +50%* 15%
=11.00%
jeff jeffy answered 2 years agoRelated Solutions
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