Mead Plastics data regarding cost of capital is as follows: Bonds Yield to Maturity is 13% Preferred
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Question:
Mead Plastics data regarding cost of capital is as follows:
Bonds Yield to Maturity is 13%
Preferred Stock value is $72
Common Stock value is $55
Dividends in Preferred Stocks are $7.18
Last year dividends in Common Stocks was $2.00
Flotation Costs in Preferred Stocks are $6 per share
Flotation Costs in Common Stocks are 10% of value
Growth rate in dividends is 4%
Tax rate is 25%
Optimal Capital Structure
Debt = 25%
Preferred Stock = 30%
Common Equity = 45%
Calculate the Weighted Average Cost of Capital (use cost of issuing new equity) (Do not round intermediate calculations. Input your answer as a percent rounded to 0 decimal places.)
Related Book For
Foundations Of Finance
ISBN: 9781292155135
9th Global Edition
Authors: Arthur J. Keown, John D. Martin, J. William Petty
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