2. Compute the overall cost of capital based the following data. Which weight is preferable? Why?...
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2. Compute the overall cost of capital based the following data. Which weight is preferable? Why? Descriptions Equity Debt Preference Shares TOTAL Specifi c cost of capital Marginal Weights Amount Proportion S 20% 200 10% 700 14% 200 1100 S 0.18 0.64 0.18 1.00 Book Value Weights Amounts Proportions 300 400 100 800 0.38 0.50 0.13 1.00 Market Value Weights Amount Proportions S 600 800 200 1600 0.4 0.5 0.1 1.00 2. Compute the overall cost of capital based the following data. Which weight is preferable? Why? Descriptions Equity Debt Preference Shares TOTAL Specifi c cost of capital Marginal Weights Amount Proportion S 20% 200 10% 700 14% 200 1100 S 0.18 0.64 0.18 1.00 Book Value Weights Amounts Proportions 300 400 100 800 0.38 0.50 0.13 1.00 Market Value Weights Amount Proportions S 600 800 200 1600 0.4 0.5 0.1 1.00
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Compute the overall cost of capital Step 1 Calculate the weighted cost of equity Weighted Cost of Equity Cost of Equity Proportion of Equity 20 04 8 S... View the full answer
Related Book For
Financial Accounting an introduction to concepts, methods and uses
ISBN: 978-0324789003
13th Edition
Authors: Clyde P. Stickney, Roman L. Weil, Katherine Schipper, Jennifer Francis
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