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Given the following information, calculate the weighted average cost of capital for Digital Processing Inc. Percent of capital structure: Preferred stock Common equity Debt 20% 40 40 Additional information: Corporate tax rate Dividend, preferred Dividend, expected common Dividend, preferred Growth rate Bond yield Flotation cost, preferred 25% $8.50 $2.50 $105.00 7% 9.5 $3.60

Given the following information, calculate the weighted average cost of capital for Digital Processing Inc. Percent of capital structure: Preferred stock Common equity Debt 20% 40 40 Additional information: Corporate tax rate Dividend, preferred Dividend, expected common Dividend, preferred Growth rate Bond yield Flotation cost, preferred 25% $8.50 $2.50 $105.00 7% 9.5 $3.60

Essentials Of Investments
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
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Given the following information, calculate the weighted average cost of capital for Digital Processing Inc. Percent of capital structure: Preferred stock Common equity Debt 20% 40 40 Additional information: |Corporate tax rate Dividend, preferred Dividend, expected common Dividend, preferred Growth rate 25% $8.50 $2.50 $105.00 7% Bond yield Flotation cost, preferred 9.5 $3.60 Price, common $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
Transcribed Image Text:Given the following information, calculate the weighted average cost of capital for Digital Processing Inc. Percent of capital structure: Preferred stock Common equity Debt 20% 40 40 Additional information: |Corporate tax rate Dividend, preferred Dividend, expected common Dividend, preferred Growth rate 25% $8.50 $2.50 $105.00 7% Bond yield Flotation cost, preferred 9.5 $3.60 Price, common $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
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