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Given the following information: Percent of capital structure: Preferred stock 20 % Common equity (retained earnings) 35 Debt 45 Additional information: Corporate tax rate 40

Given the following information: Percent of capital structure: Preferred stock 20 % Common equity (retained earnings) 35 Debt 45 Additional information: Corporate tax rate 40 % Dividend, preferred $ 5.00 Dividend, expected common $ 2.50 Price, preferred $ 97.00 Growth rate 3 % Bond yield 12 % Flotation cost, preferred $ 9.20 Price, common $ 79.00 Calculate the weighted average cost of capital for Digital Processing Inc. (Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places.) Notice that this problem asks for the weighted costs. These are the unweighted costs times the weights. Like this: (kd)(wd) = weighted cost of debt.

Given the following information:

Percent of capital structure:

Preferred stock 20 %
Common equity (retained earnings) 35
Debt 45

Additional information:

Corporate tax rate 40 %
Dividend, preferred $ 5.00
Dividend, expected common $ 2.50
Price, preferred $ 97.00
Growth rate 3 %
Bond yield 12 %
Flotation cost, preferred $ 9.20
Price, common $ 79.00

Calculate the weighted average cost of capital for Digital Processing Inc. (Do not round intermediate calculations. Input your answers as a percent rounded to 2 decimal places.) Notice that this problem asks for the weighted costs. These are the unweighted costs times the weights. Like this: (kd)(wd) = weighted cost of debt.

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