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Kirk Enterprises has a capital structure of 30 percent common stock, 10 percent preferred stock, and 60 percent debt. The flotation costs are 3.25 percent
Kirk Enterprises has a capital structure of 30 percent common stock, 10 percent preferred stock, and 60 percent debt. The flotation costs are 3.25 percent for debt, 6 percent for preferred stock, and 9.5 percent for common stock. The corporate tax rate is 34 percent. What is the weighted average flotation cost?
Select one:
A. 4.82 percent
B. 6.85 percent
C. 7.20 percent
D. 7.72 percent
E. 5.40 percent
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