Share
Explore BrainMass

Weighted Average Cost of Capital for Metals Corp

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%

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.

$2.19