Below is the long term and capital section of the balance sheet for the Seattle Distributing Co.

Category

Value

Notes Payable

$300,000

Bonds Payable

500,000

Preferred Stock

100,000

Common Stock

500,000

Retained Earnings

400,000

Interest of notes is 6%, bonds payable 4%, preferred stock dividends are 5% and the common shareholders opportunity cost is 10%. The tax rate is 25%.

Compute the average weighted cost of capital. You may want to calculate your answer using Excel, and paste the solution into the solution window.