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DOC Ltd disclosed the following The company sold 10,000 Common stock @ $100 each with a floatation costs of $20 Sold 5000 preferred stock of
DOC Ltd disclosed the following The company sold 10,000 Common stock @ $100 each with a floatation costs of $20 Sold 5000 preferred stock of $100 @ 150. This stock carry a dividend of 16% Obtained long term loan in the amount of $40,000 Issued 10,000 sh. 50, 12% debentures at a cost of $15 The company has an expected rate of return of 18% Class Exercise Required: i. Compute the cost of ordinary share capital, assuming there is no retention, and the tax rate is 40% ii. Compute the cost of debt iii. Compute the cost of debentures iv. Compute the weighted average cost of capital
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