Walnut, Inc. has determined the cost of each of its sources of capital and the desired weighting in the capital structure. See below. What is its weighted average cost of capital? Source of capital Weight After‑tax cost ______________________________________________________ Long‑term debt 40% 7% Preferred stock 10 13 Common stock equity 50 15

Essentials Of Investments
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Chapter1: Investments: Background And Issues
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Walnut, Inc. has determined the cost of each of its sources of capital and the desired weighting in the capital structure.  See below.  What is its weighted average cost of capital?

                                              

         Source of capital                     Weight                 After‑tax cost

         ______________________________________________________

          Long‑term debt                          40%                             7%

          Preferred stock                           10                               13

          Common stock equity                50                               15

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