Estimate the weighted average cost of capital


1. Foe Corporation's has the capital structure given below:
Debt (at market value) $2,000,000
Preferred stock (at market value) $800,000
Common stock (at market value) $ 3,000,000

Assuming the market weight are also the target weights for Foe Corp. please calculate the weights that should be used to find the weighted average cost of capital for Foe Corp.

2. For the problem above, if the after tax cost of debt is 8% the cost of preferred stock is 9% and the cost of common stock is 12%, what is the weighted average cost of capital?

Request for Solution File

Ask an Expert for Answer!!
Finance Basics: Estimate the weighted average cost of capital
Reference No:- TGS024201

Expected delivery within 24 Hours