Capital structure book values: Long term bond: 30 Million Euros Short term bank debt: 7.2 Million Euros Preferred stock: 5.6 Million Euros Common equity: 136 Million Euros Total = 178.8 Million Euros

Preferred stock has 100 par value and pays annual dividend of 6% of par and sold at 63.25 Euros per share Bank debt rate 9.2% Bond have a fixed 11% annual coupon and mature in 14 years. Price of the bonds is 109 Euros (based on Euros 100 par value) common stock selling at 19 Euros per share Companys marginal tax rate is 34% Beta of the firms stock is .9 Treasure bonds are yielding 7.1% Market has historically earned 8.3% more than treasury bonds

If the company sells Euros 10 million in bonds at the current market rate, and uses proceeds to repurchase common stock, what will be weighted average cost of funds considering preferred stock as debt when calculating weight of equity for unlevering/ relevering beta, use the formula beta (unlevered) = E/ V x Beta (Levered)