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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 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.

Solution Preview

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

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