Weighted Average Cost of Capital

Austin, Inc. plans to finance its expansion by raising the needed investment capital from the following sources in the indicated proportions and respective capital cost rates.

Capital Cost

Source Proportion Rate

Bonds $45\%9\%$

Preferred stock $10\%7\%$

Common stock $25\%13\%$

Retained earnings $20\%11\%$

$100\%$

Calculate the weighted average cost of capital.

Round answers to one decimal place. For example, $0\mathrm{.}457=45\mathrm{.}7\%.$

FILL IN THE BLANKS BELOW

Weighted Average $\_\_\_\%$

Cost of Capital $\_\_\_\%$

Bonds $\_\_\%$

Preferred stock $\_\_\_\%$

Common stock $\_\_\_\_\%$

Retained earnings