The Manchester based company, We Know Capital Limited (WKC), has been hired as consultants by a...

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The Manchester based company, We Know Capital Limited (WKC), has been hired as consultants by a large logistics company. As an employee of WKC, you have been assigned the responsibility of analysing the weighted average cost of capital of the company. The relevant details are as follows: Value of Common Stock Value of Preferred Stock Value of Debt Beta Dividend Rate for Preferred Stock Par Value of Preferred Stock Price of New Preferred Stock Yield To Maturity for Bonds $1,000,000 $400,000 $600,000 2.18 4.5% $90 $50 7% The risk-free rate is currently 4%, the average market return is 12% and the corporate tax rate is 25%. i) Calculate the cost of each capital structure component. (8 marks) ii) Determine the weighted average cost of capital. The Manchester based company, We Know Capital Limited (WKC), has been hired as consultants by a large logistics company. As an employee of WKC, you have been assigned the responsibility of analysing the weighted average cost of capital of the company. The relevant details are as follows: Value of Common Stock Value of Preferred Stock Value of Debt Beta Dividend Rate for Preferred Stock Par Value of Preferred Stock Price of New Preferred Stock Yield To Maturity for Bonds $1,000,000 $400,000 $600,000 2.18 4.5% $90 $50 7% The risk-free rate is currently 4%, the average market return is 12% and the corporate tax rate is 25%. i) Calculate the cost of each capital structure component. (8 marks) ii) Determine the weighted average cost of capital.