United Business Forms capital structure is as follows: Debt ............................................. 35% Preferred stock ................................. 15 Common equity

Question:

United Business Forms’ capital structure is as follows:

Debt ............................................. 35%

Preferred stock ................................. 15

Common equity ............................... 50

The aftertax cost of debt is 7 percent, the cost of preferred stock is 10 percent, and the cost of common equity (in the form of retained earnings) is 13 percent. Calculate United Business Forms’ weighted average cost of capital in a manner similar to Table 11–1.

Capital Structure
Capital structure refers to a company’s outstanding debt and equity. The capital structure is the particular combination of debt and equity used by a finance its overall operations and growth. Capital structure maximizes the market value of a... Cost Of Capital
Cost of capital refers to the opportunity cost of making a specific investment . Cost of capital (COC) is the rate of return that a firm must earn on its project investments to maintain its market value and attract funds. COC is the required rate of... Cost Of Debt
The cost of debt is the effective interest rate a company pays on its debts. It’s the cost of debt, such as bonds and loans, among others. The cost of debt often refers to before-tax cost of debt, which is the company's cost of debt before taking...