Calculate the weighted average capital cost based on the following facts common stock $150,000 has been paying dividends of 15 cents on the dollar 5% preferred $15,000 bank debt $82,500 apr is 8% income tax rate is 30.5%
1. What is the weighted average cost of capital?
2. The president wants to raise more capital. the bank will only allow you to borrow up to $100,000 total. the president needs $50,000. How would you recomend you raise the capital and why?