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Unformatted text preview: = $11,000,000 Cost ofdebt = YTM: 8 N; 1,100 PV; 60 PMT; 1,000 FV; CPT I/Y = 4.48% MV ofpreferred = 100,000 x $30 = $3,000,000 Cost ofpreferred = 3/30 = 10% MV ofcommon = 500,000 x $25 = $12,500,000 Cost ofcommon = .04 + 1.5 x (.12  .04) = 16% Total MV ofall securities = $IIM + $3M + $12.5M = 26.5M Weight ofdebt = IIM/26.5M = .4151 Weight ofpreferred = 3M/26.5M = .1132 Weight ofcommon = 12.5M/26.5M = .4717 WACC = .4151 x .0448 x (1 .4) + .1132 x.1O + .4717 x .16 = .0979 = 9.8% 12.41...
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This note was uploaded on 11/22/2011 for the course BMGT 340 taught by Professor White during the Fall '08 term at Maryland.
 Fall '08
 WHITE
 Corporate Finance

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