Sources Trade and other payables Short-term borrowings Mortgage Long-term borrowings Share capital Retained earnings Amounts $200,000 250,000 500,000 250,000 300,000 800,000 The before-tax bank charges are 11.0% for the short-term borrowings, 10.0% E long-term borrowings, and 10.5% on the mortgage. The shareholders expect t 16%. Assume that the company's income tax rate is 50%. 40% Questions financing 1. Calculate the company's after-tax cost of borrowing. Calculate the company's weighted average cost of capital. 2
Sources Trade and other payables Short-term borrowings Mortgage Long-term borrowings Share capital Retained earnings Amounts $200,000 250,000 500,000 250,000 300,000 800,000 The before-tax bank charges are 11.0% for the short-term borrowings, 10.0% E long-term borrowings, and 10.5% on the mortgage. The shareholders expect t 16%. Assume that the company's income tax rate is 50%. 40% Questions financing 1. Calculate the company's after-tax cost of borrowing. Calculate the company's weighted average cost of capital. 2
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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