Question

Given the following information: Percent of capital structure: Preferred stock 35 % Common equity (retained earnings)...

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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