After-tax Cost of Funds and Cost of Capital
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Calculate the after-tax cost of funds and the weighted average cost of capital (WACC) for the following:
Common stock Debt (annual coupon)
last dividend 3.85 coupon rate 9%
market value $45 maturity 20
growth rate $5% market value $1100.00
flotation costs 3% flotation costs 3%
weight 50% tax rate 36%
preferred stock face value $1000.00
last dividend 1.50 weight 40%
market value 13.00
flotation costs 3%
weight 10%
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Solution Summary
The solution explains how to calculate the component cost of capital and the WACC.
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