The Tom Corp wants to know its cost of capital. Its current capital structure calls for $45\%$ debt, $15\%$ preferred stock and $40\%$ common equity. Initially, common stock will be in the form of retained earnings. The costs of the sources of financing are: debt: $5\mathrm{.}5\%$; preferred stock: $7\mathrm{.}4\%$; retained earnings: $10\%$; and new common stock, $11\mathrm{.}4\%.$  What is the weighted cost of capital? Use $2$ decimals.

Answer rating: 100% (QA)

Answer Heres how to calculate the weighted average cost of capital WACC for The Tom Corp Calculate the weights of each capital source Weight of Debt W... View the full answer