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    Weighted average cost of capital

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    Global Technology's capital structure is as follows:
    Debt = 40%
    Preferred stock =15%
    Common equity = 45%
    The after-tax cost of debt is 6.5 percent; the cost of preferred stock is 10 percent; and the cost of common equity (in the form of retained earnings) is 13.5 percent.
    Calculate Global Technology's weighted average cost of capital in a manner similar to Table 11-1 on page 313.

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    Solution Summary

    The solution explains how to calculate the weighted average cost of capital

    $2.19