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The Tyler Oil Companys capital structure is as follows: Debt 15 % Preferred stock 20 Common equity 65 The aftertax cost of debt is 5
The Tyler Oil Companys capital structure is as follows:
Debt | 15 | % | |
Preferred stock | 20 | ||
Common equity | 65 | ||
The aftertax cost of debt is 5 percent; the cost of preferred stock is 8 percent; and the cost of common equity (in the form of retained earnings) is 11 percent.
Calculate Tyler Oil Companys weighted average cost of capital in a manner similar to Table 11-1. (Round the final answers to 2 decimal places.)
Weighted Cost | ||
Debt (Kd) | % | |
Preferred stock (Kp) | ||
Common equity (Ke) (retained earnings) | ||
Weighted average cost of capital (Ka) | % | |
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