Question
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
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% | 12% |
| Preferred stock | 10% | 10% |
| Common stock | 25% | 16% |
| Retained earnings | 20% | 14% |
| 100% | ||
Calculate the weighted average cost of capital. Round answers to one decimal place. For example, 0.457 = 45.7%.
| Weighted Average | |
|---|---|
| Cost of Capital | |
| Bonds | |
| Preferred stock | |
| Common stock | |
| Retained earnings | |
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Information Technology Auditing
Authors: Hall, J Scott Harr
3rd Edition
1133008046, 978-1439079119
