A company has a cost of debt of 7%, a cost of equity of 11%, and...

Transcribed Image Text:

A company has a cost of debt of 7%, a cost of equity of 11%, and a cost of preferred stock of 8%. The firm has 104,000 shares of common stock outstanding at a market price of $20 a share. There are 40,000 shares of preferred stock outstanding at a market price of $34 a share. The bond issue has a total face value of $1,000,000 and sells at 104% of face value. The tax rate is 21%. What is the company's weighted average cost of capital? O a.6.19% O b.8.82% O c.6.54% O d. 8.61% A company has a cost of debt of 7%, a cost of equity of 11%, and a cost of preferred stock of 8%. The firm has 104,000 shares of common stock outstanding at a market price of $20 a share. There are 40,000 shares of preferred stock outstanding at a market price of $34 a share. The bond issue has a total face value of $1,000,000 and sells at 104% of face value. The tax rate is 21%. What is the company's weighted average cost of capital? O a.6.19% O b.8.82% O c.6.54% O d. 8.61%

Answer rating: 100% (QA)

The detailed answer for the above question is provided below To calculate the weighted average cost ... View the full answer