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    Weighted Average Cost of Capital for Metals Corp

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    Metals Corp. has $2,575,000 of debt, $550,000 of preferred stock, and $18,125,000 of common equity. Metals Corp.'s after-tax cost of debt is 5.25%, preferred stock has a cost of 6.35%, and newly issued common stock has a cost of 14.05%. What is Metals Copr's weighted average cost of capital?

    a. 12.78%
    b. 10.84%
    c. 8.32%
    d. 6.56%

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    Solution Preview

    Calculate Weight for different items in the capital structure
    Total capital = Debt + prefererd ...

    Solution Summary

    This solution shows stepwise calculations to determine the weight for different items in the capital structure to find the weight average cost of capital.