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Cash $760,000 Long Term Debt $7,633,500 Receivables $1,250,000 Common Stocks $14,176,500 Inventories $2,225,000 Net Equipment $17,575,000 Currently the stocks are selling for a price equal
Cash $760,000 Long Term Debt $7,633,500 Receivables $1,250,000 Common Stocks $14,176,500 Inventories $2,225,000 Net Equipment $17,575,000 Currently the stocks are selling for a price equal to its book value and bonds are selling at par. It is estimated that the stockholders require a return of 13% while the yield to maturity on bonds are 9%. The company faces a marginal tax rate of 28%. What is the weighted average cost of capital for this firm? 9.31% 10.53% 10.72% 8.41%
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