Cost of Capital Spreadsheet Example Module IX Name: Date: I Capital Structure weight cost WACC Bonds $3,000,000 30% Preferred stock $1,000,000 10% Common stock $6,000,000 60% Total $10,000,000 100% =WACC II-1 After-tax cost of bonds: Semi-Annual YTM= Annual YTM= Cost of Bonds= II-2 Cost of retained earnings: DCF approach CAPM approach Average II-3 Cost of preferred stock II-4 Cost of New Common Stock II-5a Amount Weight Cost WACC Bonds 3,000,000 Preferred Stock 1,000,000 Retained earnings 6,000,000 Total 10,000,000 II-5b Amount Weight Cost WACC Bonds 3,000,000 Preferred Stock 1,000,000 New Common Stock 6,000,000 Total 10,000,000