Weighted Average Cost of Capital Gardner, Inc., plans to finance its expansion by raising the needed investment capital from the following sources in the indicated proportions and respective capital cost rates: Capital Cost Source Proportion Rate Bonds 40% 12% Preferred stock 20% 8% Common stock 30% 11% Retained earnings 10% 8%   100%     Calculate the weighted average cost of capital. Round answers to one decimal place. For example, 0.457 = 45.7%. Weighted Average   Cost of Capital Bonds Answer   Preferred stock Answer   Common stock Answer   Retained earnings Answer     Answer

FINANCIAL ACCOUNTING
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Chapter1: Financial Statements And Business Decisions
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Weighted Average Cost of Capital
Gardner, Inc., plans to finance its expansion by raising the needed investment capital from the following sources in the indicated proportions and respective capital cost rates:

Capital Cost
Source Proportion Rate
Bonds 40% 12%
Preferred stock 20% 8%
Common stock 30% 11%
Retained earnings 10% 8%
  100%  

 

Calculate the weighted average cost of capital.
Round answers to one decimal place. For example, 0.457 = 45.7%.

Weighted Average
  Cost of Capital
Bonds Answer
 
Preferred stock Answer
 
Common stock Answer
 
Retained earnings Answer
 
  Answer
 
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