In what sense does the marginal cost of capital schedule represent a series of average costs? Please explain as thorough as possible.
18. Common stock outstanding = 1,000,000 shares
Preferred stock = 500,000 shares
Convertible bonds = $5,000,000, 6% convertible to 200,000 shares
Net income = $3,000,000
Preferred dividends = $50,000
Tax rate = 35%