Determining the weighted average cost of capital


Most of the beneficial effects of diversification will have been received by the time a portfolio of common stocks contains _____ stocks.
Answer
2
40
10
50

"What is the weighted average cost of capital for the following firm? It has $500,000 in debt, $200,000 in common stock and $600,000 in preferred stock. It has a 9% cost of debt, 13% cost of common stock, 10% cost of preferred stock and a 35% tax rate."
Answer
9.15%
8.87%
11.45%
9.32%
12.25%

 

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Finance Basics: Determining the weighted average cost of capital
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