Question: Topic Covered: Long-term Financing Decisions Notes in answering: 1.Do not round off anytime during the computation. 2. Final answers must be written in percent and

Topic Covered: Long-term Financing Decisions

Notes in answering: 1.Do not round off anytime during the computation. 2. Final answers must be written in percent and rounded to FIVE decimal places.

Based on the given information, how much is the weighted average cost of capital? * Sales P 5,000,000.00 Less: Cost of Sales 2,700,000.00 Gross Profit P 2,300,000.00 Less: Operating expenses 1,100,000.00) Earnings before interest and taxes P 1,200,000.00 Less: Interest expense 500,000.00 Earnings before taxes P 700,000.00 Less: Tax (30%) 210,000.00 Net Earnings P 490,000.00 Required rate of return - ordinary shareholders 15% Market value of ordinary shares P5,000,000 Market value of long-term debt P6,250,000

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