Question

Given the following information, calculate the weighted average cost of capital for Digital Processing Inc. Line up the calculations in the order shown in Table.
Percent of capital structure:
Preferred stock ............. 20%
Common equity ............ 40
Debt ................. 40
Additional information:
Corporate tax rate ........... 34%
Dividend, preferred ........... $8.50
Dividend, expected common ........ $2.50
Dividend, preferred .......... $105.00
Growth rate .............. 7%
Bond yield ............... 9.5
Flotation cost, preferred ......... $3.60
Price, common ............ $75.00



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  • CreatedOctober 14, 2014
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