The capital structure for Craig Corporation is provided below. The company plans to maintain its capital structure in the future. If the firm has a 5% after tax cost of debt, a 10% cost of preferred stock, and an 15% cost of common stock, what is Craig Corporations weighted cost of capital.

Capital Structure

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Bonds $400,000

Preferred stock 100,000

Common stock 500,000

Total $1,000,000

ANSWERS:

12.4%

14.3%

8.5%

9.7%