Check my work Problem 11-24 Changes in costs and weighted average cost of capital (L011-1) Brook's Window Shields Inc. is trying to calculate its cost of capital for use in a capital budgeting decision, Mr. Glass the vice-president of finance, has given you the following information and has asked you to compute the weighted average cost of capital The company currently has outstanding a bond with a 60 percent coupon rate and another band with a 3.0 percent coupon vote. The firm has been informed by its investment bonicer thot bonds of equal risk and credit rating are now selling to yield 70 percent The common stock has o price of $8B and an expected dividend (Oy) of 55 60 per share. The firm's historical growth rate of earnings and dividends per share has been 8.0 percent, but security analysts on Wall Street expect the growth to slow to 7 percent in future years The preferred stock is selling at $84 per share and carries a dividend of $8.20 per share the corporate tax rate is 35 percent. The flotation cost is 2.5 percent of the selling price for preferred stock The optimum capital structure is 40 percent debt 40 percent preferred stock, and 20 percent common equity in the form of retained earnings a. Compute the cost of capital for the individual components in the coprtal structure (Do not round intermediate calculationsInput your answers as a percent rounded to 2 decimal places) Weighted Cost Debt Preferred stock Common equity Preferred stock Common equity b. Calculate the welghted cost of each source of capital and the weighted average cost of capital. (Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places.) Weighted Cost 96 Debt Preferred stock Common equity Weighted average cost of capital 0.0096 Next >