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answers please thankyou so much Brook's Window Shields Incorporoted is trying to colculate its cost of copital for use in a copital budgeting decision. Mr.
answers please thankyou so much
Brook's Window Shields Incorporoted is trying to colculate its cost of copital for use in a copital budgeting decision. Mr. Glass, the vice president of finance, has given you the following information and has osked you to compute the weighted average cost of capital. The company currently has outstanding a bond with a 6.2 percent coupon rate and another bond with a 3.2 percent coupon rate. The firm has been informed by its investment bonker that bonds of equal risk and credit rating are now selling to yield 7.2 percent. The common stock has a price of $62 and an expected dividend (D1) of $3.30 per share. The firm's historical growth rate of eamings and dividends per share has been 11.5 percent, but security analysts on Wall Street expect this growth to alow to 9 percent in future years. The preferred stock is selling at $58 per share and carries o dividend of $9.75 per share. The corporate tax rate is 30 percent. The flotation cost is 1.9 percent of the selling price for preferred stock. The optimum capital structure is 50 percent debt, 5 percent preferred stock, and 45 percent common equity in the form of retained earning: a. Compute the cost of copinal for the individual components in the copital structure. Note: Do not round intermedlate calculations, Input your answers as a percent rounded to 2 decimal places. b. Colculate the weighted cost of esch source of copital and the weighted overege cost of copitel Note: Do not round intermedlate calculations. Input your answers as a percent rounded to 2 decimai places Step by Step Solution
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