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Problem A 980.00 0.12 0.09

This document contains calculations related to costs of various sources of financing for companies. It includes the net proceeds and costs of debt, preferred stock, and common stock equity. It also shows the weighted average cost of capital (WACC) calculation using the costs and weights of debt, preferred stock, and common stock.

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34 views1 page

Problem A 980.00 0.12 0.09

This document contains calculations related to costs of various sources of financing for companies. It includes the net proceeds and costs of debt, preferred stock, and common stock equity. It also shows the weighted average cost of capital (WACC) calculation using the costs and weights of debt, preferred stock, and common stock.

Uploaded by

Sharjaaah
Copyright
© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
Available Formats
Download as XLSX, PDF, TXT or read online on Scribd
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Problem A

1 Net Proceeds 980.00

2 Cost of debt (before tax) 0.12


Tax Rate 0.70
Cost of debt (after tax) 0.09
3 121.33
990.00
Approximate cost of debt (before tax) 0.12
Tax Rate 0.70
Cost of debt (after tax) 0.09

Problem B
4 Cost of preferred stock 0.16

Problem C
5 Cost of preferred stock 0.11

Problem D
6 Cost of common stock equity 0.15

Problem E
7 Net Proceeds 52.00
8 Cost of retained earnings 0.12
9 Cost of new common stock 0.13

Problem F
10 Weighted Cost WACC
Debt 0.55 0.067 0.04
Preferred stock 0.10 0.092 0.01
Common stock 0.35 0.106 0.04
0.08

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