Caterpillar Industries finances its projects with 40% debts, 10% preferred stock and 50% common sock The...

 

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Caterpillar Industries finances its projects with 40% debts, 10% preferred stock and 50% common sock The company can issue bonds at a yield to maturity of 8.4% The cost of preferred stock is 9% The risk free rate premium is 6.5%; market risk premium is 5% Beta is equal to 1.3 and company's tax rate is 30% Assume that the firm will be able to use retained earnings to fund the equity portion of its capital budget What is the company's weighted average cost of capital? Caterpillar Industries finances its projects with 40% debts, 10% preferred stock and 50% common sock The company can issue bonds at a yield to maturity of 8.4% The cost of preferred stock is 9% The risk free rate premium is 6.5%; market risk premium is 5% Beta is equal to 1.3 and company's tax rate is 30% Assume that the firm will be able to use retained earnings to fund the equity portion of its capital budget What is the company's weighted average cost of capital?