Winter's prefers to finance its capital spending with 35 percent debt, 25 percent internal equity, and 40 percent external equity. The floatation cost of debt is 5.2 percent while it is 9.1 percent for equity. What is the weighted average flotation cost?
Winter's prefers to finance its capital spending with 35 percent debt, 25 percent internal equity, and 40 percent external equity. The floatation cost of debt is 5.2 percent while it is 9.1 percent for equity. What is the weighted average flotation cost?
Chapter14: Security Structures And Determining Enterprise Values
Section: Chapter Questions
Problem 12EP
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![4 Winter's prefers to finance its capital spending with 35 percent debt, 25 percent internal equity, and 40
percent external equity. The floatation cost of debt is 5.2 percent while it is 9.1 percent for equity. What
is the weighted average flotation cost?
A,
6.28%
B 5.46%
C.
6.49%
D 7.63%](/v2/_next/image?url=https%3A%2F%2Fcontent.bartleby.com%2Fqna-images%2Fquestion%2F2389b297-cbbe-4f0b-98c7-d5a0b4ab45cf%2F1a080725-00af-44c8-b2c8-b411fa53d297%2Feob1whc_processed.jpeg&w=3840&q=75)
Transcribed Image Text:4 Winter's prefers to finance its capital spending with 35 percent debt, 25 percent internal equity, and 40
percent external equity. The floatation cost of debt is 5.2 percent while it is 9.1 percent for equity. What
is the weighted average flotation cost?
A,
6.28%
B 5.46%
C.
6.49%
D 7.63%
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