Calculate the cost of capital for a project

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Reference no: EM13332587

Calculate the cost of capital for a project with the following characteristics.

* The total amount required for the project is 22.6 million dollars.

* A loan for 3.4 million will be requested, at an interest rate of 11.2 percent with 3 payments per year, interest compounded at every payment

* A bond issue for 5.2 million will be open, paying a bond rate of 8.4 percent with 4 payments per year.

* The remaining amount will be financed by issuing common stock. The dividends payed are 9.27 and the average price of the stock is 127.28

* The applicable tax rate is 38 percent.

Reference no: EM13332587

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