Given the following information, calculate the weighted average cost of capital for Digital Processing Inc. Percent of capital structure: Preferred stock 20% Common equity Debt 40 40 Additional information: Corporate tax rate Dividend, preferred Dividend, expected common Dividend, preferred Growth rate Bond yield Flotation cost, preferred Price, common 25% $8.50 $2.50 $105.00 7% 9.5 $3.60 $75.00 You are required to calculate: a. Cost of debt (after tax) b. Cost of preferred stock c. Cost of common equity d. WACC
Given the following information, calculate the weighted average cost of capital for Digital Processing Inc. Percent of capital structure: Preferred stock 20% Common equity Debt 40 40 Additional information: Corporate tax rate Dividend, preferred Dividend, expected common Dividend, preferred Growth rate Bond yield Flotation cost, preferred Price, common 25% $8.50 $2.50 $105.00 7% 9.5 $3.60 $75.00 You are required to calculate: a. Cost of debt (after tax) b. Cost of preferred stock c. Cost of common equity d. WACC
Essentials Of Investments
11th Edition
ISBN:9781260013924
Author:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Publisher:Bodie, Zvi, Kane, Alex, MARCUS, Alan J.
Chapter1: Investments: Background And Issues
Section: Chapter Questions
Problem 1PS
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