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please help me to solve these questions. (e) Kayla Ltd. is considering to take a few capital budgeting projects costing $10 million. As a finance
please help me to solve these questions.
(e) Kayla Ltd. is considering to take a few capital budgeting projects costing $10 million. As a finance manager, you are required to estimate the firm's cost of capital. The firm's current capital structure, which is considered optimal, is as follows: Long term debt (Bonds) Preferred stocks Equity (Common stocks) 20% 30% 50% Cost of equity is 12%, cost of debt is 6% and cost of preferred stocks is 8%. Calculate the weighted average cost of capital if the corporation tax is 30%. (8 marks)Step by Step Solution
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