Universe Company finances its business with 70% equity, 10% preferred stock and 20% loan. Cost of equity was determined to be at 10% while the loan at 4%. Preferred Stock costs at 5%. What is the required rate of return of Universe Company according to the Weighted Average Cost of Capital? (Note: The format of the answer should be in % rounded off into two decimal places. Example: 19.05%, 16.90%)

Universe Company finances its business with 70% equity, 10% preferred stock and 20% loan. Cost of equity was determined to be at 10% while the loan at 4%. Preferred Stock costs at 5%. What is the required rate of return of Universe Company according to the Weighted Average Cost of Capital? (Note: The format of the answer should be in % rounded off into two decimal places. Example: 19.05%, 16.90%)

FINANCIAL ACCOUNTING

10th Edition

ISBN:9781259964947

Author:Libby

Publisher:Libby

Chapter1: Financial Statements And Business Decisions

Section: Chapter Questions

Problem 1Q

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