Given the following information:
Percent of capital structure:
Preferred stock 35 %
Common equity (retained earnings) 45
Debt 20
Additional information:
Corporate tax rate 30 %
Dividend, preferred $ 8.00
Dividend, expected common $ 3.50
Price, preferred $ 110.00
Growth rate 6 %
Bond yield 6 %
Flotation cost, preferred $ 4.50
Price, common $ 85.00
Calculate the weighted average cost of capital for Digital Processing Inc. (Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places.)
Weighted Cost | ||
Debt | 2.45selected answer incorrect | % |
Preferred stock | 4.55selected answer incorrect | |
Common equity (retained earnings) | 0.84selected answer incorrect | |
Weighted average cost of capital | ? | % |
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