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Unformatted text preview: Preferred: 8% for the first $500,000 of new preferred. 9% for up to an additional $500,000 of new preferred. Equity: 13% for retained earnings. 14% for up to the first $2,000,000 of new common stock. 15% for up to an additional $2,000,000 of new common stock. 16% for up to an additional $2,000,000 of new common stock. Given this information, determine the weighted average cost of capital for the entire $4,000,000 to be raised for the expansion. A. 9.65% B. 8.85% C. 9.45% D. 9.05% E. 9.25% 30. Assume that your firm has a weighted average cost of capital of 10.00%, and has a capital structure consisting of 40 percent debt and 60 percent equity. Also assume that the firms tax rate is 40 percent and that its cost of stock/equity (ignore flotation costs) is 14 percent. Given this information, determine the firms beforetax cost of debt. A. 6.875% B. 6.500% C. 6.667% D. 6.125% E. 6.333%...
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 Spring '08
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 Cost Of Capital, Debt

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