Homework: Chapter 14 Homework Save Score: 0 of 3 pts 6 of 6 (2 complete) HW Score: 18.18%, 2 of 11 pts P14-27 (similar to) Question Help (Weighted average cost of capital) As a member of the Finance Department of Ranch Manufacturing your supervisor has asked you to compute the appropriate discount rate to vse when evaluating the purchase of new packaging equipment for the plant. Under the stumption that the firm's present capital structure reflects the appropriate mix of capital sources for the firm, you have determined the market value of the firm's capital structure as follows: To finance the purchase. Ranch Manufacturing will sell 10-year bonds paying interest at a rate of 6.6 percent per year (with somiannual payment) at the market price of $1,036. Preferred stock paying a $2.07 dividend can be sold for $25.77. Common stock for Ranch Manufacturing is currently selling for $54.04 per share and the impaid a $2.94 dividend last year. Dividends are expected to continue growing at a rate of 4.9 percent per your into the indefinite future, the firm's tax rate is 30 percent, what countrie should you use to evaluate the equipment purchase? Calculate component weight of capital The weight of debt in the firm's capital structure is 33.02 % (Round to two decimal places) Data Table The weight of preferred stock in the firm's capital structure is 16.51% (Round to wo decimal places) Source of Capital Market Values The weight of common stock in the firm's capital structure is 60.45% (Round to two decimal places) Bonds $3,000,000 $1.800,000 Preferred stock b. Calculate component costs of capital Common stock $5,500,000 The afor-tax cost of dubt for the firm is % (Round to two decimal places.) Print Done Enter your answer in the answer box and then click Check Answer Clear All Chocker 3 parts remaining