Cost of Financing and Weighted Average Cost of Capital CompuTech needs to raise $212,000 from the following four sources. Assume that the companys income tax rate is 33%. Share capital 100,000

Long-term borrowings (mortgage) 60,000

Trade and other payables 17,000

Short-term borrowings (term loan) 35,000

The bank charges 12% (before tax) for the term loan and 11% for the mortgage. The Millers expect to earn 8% on their savings. Questions

1. Calculate the companys after-tax cost of financing.

2. Calculate the companys weighted average cost of capital.