Use the information in Exercise 2 and the following costs for individual financing sources to calculate the company’s weighted average after-tax cost of financing and cost of capital.
Sources Amounts
Retained earnings ........... $450,000
Share capital .............300,000
Trade and other payables ........300,000
Long-term borrowings .........900,000
Working capital loan ........ 70,000
Short-term borrowings ........200,000

Sources Cost (%)
Share capital ............ 14
Trade and other payables .......0
Retained earnings ......... 12
Long-term borrowings .......6
Short-term borrowings .......8
Working capital loan ......... 6.5