Please compute the Weighted Average Cost of Capital.
for Gold Coast Homecare based on the assumptions presented in
the case. You only need to compute the overall cost of capital, not the divisional
cost of capital. You also do not need to compute the not-for-profit hospital?s home
health care business cost of capital.
The question wants you to fill up the weighted average cost of capital table which is given in the excel spreadsheet. It requires you to fill up the cells relating to the cost of bonds, equity shares and retained earnings. The spreadsheet mentions preference shares but since the company balance sheet has no mention of it we understand that there are no preference shares issued. The spreadsheet wants you to sum up the costs and calculate the weighted average.
<br>Given below is a template to help you calculate the Weighted Average.
<br>1. Fill cell D31 by multiplying long term debt i.e. 20 million by seven percent.
<br>2. In cell D32 we do not fill anything because the company does not ...