Given the following information on the Hamilton Corp., Percent of capital structure: Debt - 40% Preferred stock
Question:
Given the following information on the Hamilton Corp., Percent of capital structure:
Debt - 40%
Preferred stock - 20%
Common equity - 40%
Additional information:
Bond coupon rate - 12%
The bond yield to maturity - 10%
The expected dividend, common - $6.00
Dividend preferred - $13.00
Price, common - $65.00
Price preferred - $108.00
Flotation cost preferred - $3.50
Growth rate - 5%
Corporate tax rate = 40%
Required
Calculate Hamilton Corp.'s weighted cost of each source of capital and the weighted average cost of capital. (Round your intermediate calculations and final answers to 2 decimal places. Also, remember to multiply by various capital costs by the "percent of capital structure" weights.)
Weighted cost Debt (Kd)% Preferred stock (Kp) Common equity (Ke) Weighted average cost of capital (Ka)%
Intermediate Financial Management
ISBN: 9780357516669
14th Edition
Authors: Eugene F Brigham, Phillip R Daves