SCC Inc. has the following financial information: 

Current liabilities              $900,000

Long-term debt                 $1,300,000

Total liabilities                   $2,200,000

Preferred shares               $3,500,000

Common equity                $6,200,000

The long-term debt consists of a single bond issue paying 6% interest annually. These bonds currently yield 7.5% in the market. The current cost of the preferred shares is8%. The current cost of the common shares is 12%. The company’s tax rate is 40%. What is SCC Inc.’s weighted average cost of capital (rounded to the nearest tenth of a percent)?

Answer rating: 100% (QA)

1 Cost of debt The cost of debt can be calculated using the formula Cost of debt Yield to Maturity Y... View the full answer