The table below shows a firms capital structure and

Question

The table below shows a firm's capital structure and estimated capital costs. Calculate this firm's weighted average cost of capital.

Source of capital          Amount            After Tax Cost of Capital

Bonds                         $1,250,000                   5.25%

Preferred Stock               500,000                  12.80%

Retained Earnings       3,800,000                   15.35%

A. 9.00%

B. 10.51%

C. 12.85%

D. 15.35%