Weighted Average Cost of Capital

Gardner, 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 $30\%13\%$

Preferred stock $10\%9\%$

Common stock $50\%12\%$

Retained earnings $10\%9\%$

$100\%$

Calculate the weighted average cost of capital.

Round answers to one decimal place. For example, $0\mathrm{.}4567=45\mathrm{.}7\%.$

Weighted Average

Cost of Capital

Bonds

Preferred stock

Common stock

Retained earnings